With the availability of several banks and lending agencies in the market which are eager to lend you personal loans at reasonable rate of interest, the process of personal loans has become easier than ever before. In fact, if you are eligible enough to get personal loans, the banks and lending agencies will be happy to offer you personal loans at attractive rate of interest. In fact, that the banks compete against each other in getting the deal done.
Everything has gone on line with the easier process for loan approvals. You can visit several websites for the purpose of eligibility calculator. Many such options are available at your finger tips to check, if you are eligible to take a loan and what the maximum amount of loan you are eligible for. Here are the steps, which you must avoid while applying for personal loans. Such silly mistakes can result in the rejection of your loan applications.
#1. Address Proof Mismatch
An error which can result in the rejection of your personal loan application is the address proof mismatch. If the address you provided, mismatches with the proof of address as furnished by you, the loan application may get approved. Even in the case, you keep on moving or keep on switching places and furnishing details based on your places can also put your loan application in the jeopardy. Thus, it is always suggested that furnish an address based on your permanent details or go for lease agreement or electricity bill.
#2. Not Using Your Credit Card
One of the most decisive factors in the approval or rejection of the loan application is the CIBIL Score. This CIBIL Score is calculated considering several factors as furnished by the banks. The CIBIL Score which generally varies from a score of 300 to 900, is the decisive factor in presenting the overall image of the borrowers and banks in fact, consider it as the first document for either the rejection or approval of the personal loan application of any person. The CIBIL Score, which is dependent on several factors, can be greatly improved by the use of credit cards. One of the most important factors is the Credit Card usage, which can greatly improve the CIBIL Score of a person. One must also keep in mind that having a credit card and not using it is also a bad indication and returns your CIBIL Score with 0 or -1. Thus, use your credit card wisely and improve your CIBIL Score.
#3. Gross Salary vs Net Salary
There is a difference between gross salary and net salary. One must always quote Net Salary as it is the most critical aspect while applying for personal loan. There are several ways available with the banks to know your net salary and thus quoting gross salary is not a wise decision.
#4. Not Filing ITRs
ITRs or Income Tax Return is the small but very useful process for a person. Since, it is available online, there is nothing to worry considering time and thus one can quite easily complete the steps for filling in the ITRs. Keep in mind that most loans get delayed because of this small step as several banks or lending agencies ask for ITR to cross check the criteria for loan approval.
#5. Going After Cost
Many people in India do have the mindset of comparing things with just a single factor and its ‘Money’. But, it is always advisable to consider several other factors like customer service and total cost to pay over long run to compare several banks offering for your personal loan.
#6. House Ownership Not in Your Name
One important factor, which can prove to be a major hindrance in getting a loan approval, is the situation when you don’t own the house and not even possess a nominal rental agreement in order to prove your residence. Thus, even if you are living with any relative or sibling, make an effort to get a nominal rental agreement which can be a source of your residential proof, thus making you traceable for banks. In the absence of this, even if you are eligible, you may be deprived of loan approval and can suffer during the time of urgent needs.
#7. Limited Research of Loan Options
The question for you all! Have you done enough research for all the details and options available at your local banks for personal loans? Check all factors involved in the loan like rate of interest, tenures, prepayment charges and various other factors, which are important parts of the personal loan.
#8. Long Tenure with Low EMI
Selecting the long tenure with low EMI is one of the traps, which most people often fall into. Selecting the small tenure with higher EMI is more cost effective because of absolute payout conditions. However, before making a decision on such a factor, consider all your expenses, your income and your future expenses. Make a decision based on considering your future plans.
#9. Multiple Loan Applications
Going for multiple loans at a single time, affects your credibility as a borrower. Applying for multiple loans makes you suspicious. Thus, it is advised to apply after detailed analysis of the available options. Avoid applying for loans simultaneously.
#10. Taking a loan for recreation
In fact, taking a personal loan just for recreation purpose is a mistake. We advise you to take a loan only during the times of financial needs. Don’t just end up with huge debt for small moments of happiness and suffer later. Make a wise decision considering your future aspects.
A personal loan can come as a helping hand during your times of needs and can provide you stability and a sign of relief during the most emergency Financial needs.