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Hello, reader! Want to pursue higher education? Or buy your dream home in future? A loan helps you fulfill all these dreams. Applying for a loan is quite easy. Banks are more likely to consider your loan applications, but there are times when they may not. However, you need not worry. Remember these 7 dos and don’ts while selecting a loan option. Here is a look:
1. Get your credit score: A credit report is a record of your financial history, specifically borrowings and repayment. The record contains details about previous loans and loan applications, employment record and other financial details. It finally calculates a credit score. Higher the score, greater is your chance of getting a loan. In contrast, if your credit score shows a bad history, then your loan application may be rejected.
2. Research: In accordance with your credit score, research thoroughly for available loans that fit your needs. You can get a secured as well as an unsecured loan. Unsecured loans do not ask for collaterals (security). However, remember, you will have to pay more interest for an unsecured loan. Also, more money can be availed against secured loans as they are taken against a collateral security. Home loans or car loans are secured loans as they are based upon the asset, which can be repossessed by the lender on non-payment of the loan.
3. Correct loan amount: Only seek a loan for an amount that you actually require for a given purpose. This is because availing a loan lowers your credit score. A low credit score makes it hard to secure fresh loans in the future. So be very careful while applying for a loan. Also, do not apply for a loan unless you are sure. Applying for loans that don’t get approved will also lower your credit score.
4. Timely repayment: Do make loan repayments in time to secure an early closure and end of your debt. Late and irregular repayments, financial indiscipline or frequency of loans hit your credit report and can hurt your chances of securing a loan in future.
5. Keep lenders engaged: If facing difficulties in repaying loans, do not hide your presence, but confide with the lender about the situation. Realizing your difficulties, chances are that your lender will help you restructure the re-payment schedule.
6. Don’t fall prey to suspicious lenders: In the hope of finding easy loans, don’t fall victim to schemes, which offer you easy loans at a higher interest rate. In trying to avoid documentation and checks, you can lead yourself to lenders who could exploit your unwillingness to go through a process to secure a loan. You may find yourself in trouble.
7. Payday lenders: There are some lenders, who issue loans to you in the time period between your paychecks. Avoid these as they can charge high interests. It is advisable to not go for payday loans as you could end up paying very high interest.
One of the financial institution which offers personal loan without any collateral and also multiple repayment options is Tata Capital. Visit Tata Capital to know more about personal loans.