Mistakes to Avoid When Seeking a Quick Personal Loan
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What Not to Do When You Are Looking For a Quick Personal Loan
Are you looking for a quick personal loan? You’re not the only one; Indian consumers have taken to instant or quick personal loans like never before. Reports by Paisabazaar indicated how 1/5th of all personal loans are taken for travel, as of July, 2023, with one out of five borrowed for this purpose between January and June last year. In Q2 2023, 24% of people took vacation loans, accounting for 21% of overall survey respondents, while 31% took loans for home renovations. Others also took these loans for clearing/refinancing other loans including credit card outstanding amounts (10%) and also for medical costs (9%). The other 29% was taken for education, business, or wedding costs.
This clearly shows how quick personal loans have become a mainstay for people in the country, when it comes to meeting sudden expenditure requirements. However, while applying for these loans, there are a few don’ts that you should religiously follow. Here’s looking at the same a little more closely in this article.
Don’ts While Taking a Quick Personal Loan
Here are a few don’ts worth noting when you are looking to get a quick personal loan.
- Do not apply for more than you actually require - This is a common mistake that many borrowers make and one that you should avoid. Apply for only the sum that you will require currently without falling into the temptation to take more if you are eligible for the same. If you take a higher amount, you will only have to pay more interest in the long run, which may dent your overall budget.
- Do not take personal loans for expenses which are not essential - You should carefully consider before taking a quick personal loan for luxury or non-essential purchases/costs.
- Do not take multiple loans together - You should never take multiple quick personal loans together from various financial institutions. It will lead to financial issues if you are not able to manage repayments properly and miss due dates. Defaults will hinder your credit score and you will be saddled with a high proportion of unsecured debt that will reflect badly on your credit report.
- Do not apply for multiple personal loans at one go - If you apply for multiple personal loans at one go, it will lead to more hard inquiries (for each application) and this will lower your credit score. A reduced credit score will be problematic when you are applying for the loan in the first place.
- Do not choose too good to be true offers - Always be wary of offers that seem too good to be actually true. Borrow only from lenders who are reputed banks and financial institutions with a proper track record and under the regulation of relevant authorities. You should do your homework on the reputation of the lender and avoid lenders who are questionable and unregulated. Always read reviews on the official websites before taking the plunge.
Do not apply for a personal loan without having a proper repayment plan in place. You should check the expected monthly EMI with an online calculator and work out whether you can afford to comfortably repay the same every month without any defaults. Keeping these aspects in mind will help you find and manage your quick personal loan seamlessly without any hassles.
Conclusion
These are a few things that you should always note while applying for quick personal loans. Make sure that you apply with the right lender and also submit your application for a single loan to keep your credit score healthy. Coming to the credit score, it is recommended that you check the same carefully before applying. Anything around 750 or above will automatically increase your chances of getting a personal loan. It is also wise to check the eligibility criteria and compare the interest rates offered by various lenders before finalizing your loan application.
FAQs
1. What is a quick personal loan?
A quick personal loan is one that is usually sanctioned and disbursed online and can be obtained easily with your basic personal and income documents.
2. What is the maximum personal loan amount?
The personal loan amount depends on the policies of the bank along with factors like the tenure, interest rate, and your repayment ability. It may vary between Rs. 1-10 lakh in many cases.
3. What is the interest rate on a quick personal loan?
The rate of interest on a quick personal loan may vary between 12 and 38% on average (per annum). However, it depends on several factors and varies across banks and financial institutions.
About Unity Small Finance Bank
Unity Small Finance Bank is committed to making banking simpler and more accessible for everyone. Our services include Savings Account, NRI account, Current Account, Fixed Deposits, and Personal Loans offering flexible tenures and attractive interest rates. We also offer financing options like MSME Loans and Microfinance to support businesses and underserved communities. Learn more about Unity Small Finance Bank here.
