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7 Mistakes to Avoid When Taking Up a Personal Loan for Business!
Biz & Co

7 Mistakes to Avoid When Taking Up a Personal Loan for Business!

Every now and then people need to take a personal loan. These loans are considered as the unsecured advances that can help the person get out of trouble easily. Such loans help the person when there is a shortage of money. It is the best way to come out of all the troubles without getting anyone’s help. These days the demand for the personal loan is much higher and that is the reason why its interest rate is even higher. That is why one needs to work hard so that they can easily get the better terms. But at the time of choosing the personal loan, a person should avoid certain problems like-

1. Check the credit card score

It is essential to check the credit card score because the lender is going to give the loan on behalf of the credit card score. It means if a person is not having a good score in the credit card, then he or she might not be eligible for the loan. So, one needs to improve their score, if they want to avail the personal loan.

2. Paperwork

The lender would like to ask the reason for taking the loan. Even they will be checking the assets whether the person is able to repay the loan in the future or not. So, it is suggested that the person should maintain their own books in a particular order. All the certified copies of the loss and profit account, cash flow statement, balance sheet, and the income tax returns should be ready with the borrower so that they can show it to the lender in sequence. Most of the times, borrowers forget to do the paperwork and then by the end of the day their loan is rejected.

3. Calculate the financial position

If one is thinking to get the personal loan, it is suggested that the person should calculate their financial position first. This will help in figuring out the total amount of loan that one actually want and secondly a person is able to calculate whether he or she will be able to pay the EMIs on time or not. Paying the principal amount along with the interest could be an additional burden on the person. That is why one needs to be clean with their financial positions before taking any loan.

4. Hidden fees

Almost all the fees are communicated upfront, but one needs to check whether the lender is going to charge any hidden fees or not. Some of the lenders might change fees like-

• Documentation charges

• Charges to change the tenure of the loan

So, it is the duty of a person to read all the documents carefully before applying for a loan.

5. Settling for less

There are some people who might take a personal loan on instant approval. Although, it is not a bad idea one should look at the best offers that are offered by other organizations.

6. Opting for the long tenure

People those who need to pay small EMLs should opt for the longest tenure. But one should understand that, if they are taking longer tenure, then they need to pay more interest on the principal amount.

7. Not checking the eligibility criteria

All the lenders have their own eligibility criteria such as the age, income, residential location and much more. One needs to check the eligibility criteria before applying for the loan.

So, if you are thinking to opt for a personal loan, then it is suggested to use the online Quote Raters provided online by the insurance companies.