To err is human; most of us have made one or two in our lifetime. While these mistakes can teach us a lesson and show us how to get better, financial ones will often cost you dearly an expensive way of learning.
Getting through the financial world is no easy feat, as numerous obstacles stand in the way of completing anything from paying off your debts to investing. The seemingly straightforward task of applying for a loan or personal finance can also be full of hurdles, and you must be cautious.
Don’t let a few missteps prevent you from securing a medical emergency loan. Here are some of the mistakes we make when applying for a personal loan:
Mistake 1. Getting a High Interest Loan
While competitive fees and terms & conditions can be appealing, you shouldn’t settle for a high-rate loan. It’s unnecessary. Nevertheless, it is often easy to overlook the amount you will ultimately pay.
Before applying for a loan, know how you will use it. Will you be using the funds to consolidate your debts? Purchase a car or make wedding preparations? Knowing the main purpose of getting the loan will make it easier to get it with good terms.
If you can provide an asset to secure the loan, you may opt for a secured option. If that sounds risky, or you don’t have an asset currently, an unsecured loan is your best bet. Remember that the best rate is out there waiting for you; all it takes is time and effort to find it.
Mistake 2. Trusting Fake Lenders
If you’re in a rush to acquire cash urgently, you must take time to investigate lenders or loan apps thoroughly. Choosing a loan app or a lender without properly verifying their contact information, website, or customer reviews can be risky. You can be taken advantage of and have your hard-earned money stolen. Ensure that the lender is reputable before trusting them.
lendingplate is a reputable lender offering unsecured loans at a flexible repayment period. Plus, its online application process is quick and easy, letting you get approved in minutes.
Mistake 3. Not Checking the Credit Score
Your credit score is a top factor when applying for a medical emergency loan. It could be the difference between having access to favorable rates and your loan application being denied outright. Though some lenders provide finance to those with bad credit, it is good to check your score online.
A good credit score will give you a greater chance of acquiring a loan, but it’s critical to seek out the best lender and submit your application online and wait to receive your funds and start your next life happily.
However, if your credit score isn’t very good, you can still improve it before you apply for the loan. This will help you rebuild your financial history and secure a more attractive loan rate.
Mistake 4. Choosing a Longer Tenure
Longer tenures correspond to smaller EMIs. At a glance, this seems like an ideal option, but it’s not. Longer tenure means you have to repay your loan for a longer time, and each time, the interest rates keep on being added to the loan, which means you will be paying more in total.
Most borrowers tend to choose longer tenure, which is very costly. You should opt for the loan tenure that you can pay each month. The shorter this duration, the better.
Mistake 5. Not Making Repayments on Time
After you have been approved for a loan and received your funds, you must repay it at some point. Though it might sound simple, it’s easy to forget.
The mistake of forgetting to repay your loan is common among first borrowers. Though it can seem a harmless mistake, if you miss repaying your loan, it’s recorded in the credit history and can hurt your credit score. Not only will this decrease the likelihood of receiving another loan from lenders in the future, but it could also affect your other financial opportunities.
If you can manage utility bills or credit card payments, repaying your loan should also be a breeze. It’s as easy as managing any other type of bill. Whether that means setting up an automated payment system in online banking, writing down payment dates on a calendar, or adding reminders to your phone, whatever works best for you.
Mistake 6. No Considering Your Budget
Are you planning to get a medical emergency loan to use it for medical bills? Or you just want a loan to cover your other debts? Obtaining a loan can provide you with exciting possibilities and help in times of financial distress. Nevertheless, it also results in outstanding loans which must be repaid.
Don’t get lost in the loan pre-approval process without knowing whether you can repay it. Excessive borrowing can quickly lead to many unmanageable expenses; obviously, you don’t want any of that.
So, it’s prudent to review your budget and calculate the costs for the loan repayment. If you get the loan, will it be strenuous to your budget? Or can you manage to pay these expenses without a hassle?
The repayment amount shouldn’t exceed 25% of your income. If it surpasses that amount, then consider alternative ways to raise money. Start a savings account or find strategies to save more funds each month.
Mistakes are inevitable in our daily lives. But when it comes to money, you do not have to make mistakes in the name of learning. Doing your homework, monitoring your credit score, and budgeting for repayments will help you avoid the costly mistakes most people make when applying for a personal loan.
Are you in need of a personal loan with favorable terms? Look no further than lendingplate. As long as you meet the necessary requirements, you are assured to receive approval for your loan within an hour if not minutes.