There is no doubt that credit is a necessity in today’s time to fulfil many aspirations, needs, and desires. New age financial organizations are already offering instant loans and are up in arms against competitors to offer customized personal loan products.

Yes, instant loans are attractive because they can keep at bay the issues of saving for many future events. An instant loan is also appealing because it is practical to avail a loan and repay in EMIs over a long tenor.

As a result, borrowers are, so amazed by the quick speed of approval and disbursal that they overlook some pitfalls or traps of a personal loan.

Have a look at the four dangerous personal loan pitfalls and how to keep them at bay.

Prepayment Charges

Picture this!

You took a personal loan for 36 months. Nine months after taking the loan, your increment which was due was processed, and you also got some amount as part of your bonus.

Now, you want to close the loan before its schedule and save on the personal loan rate of interest.

Much to your shock, you find that your lender has an exorbitant prepayment fee. You don’t have other option to choose but to drag the repayment of the loan.

Always opt for a lender that provides you with a free pre-closure facility and confirm it before you sign the loan deal.

Processing Fee

Even if you have a great CIBIL score to your advantage, you can’t escape paying the processing fee.

However, you can still land a better deal if you could compare the annual percentage rate (APR) of the loan rather than the personal loan rate of interest rate alone.

Did you know that many loan providers deduct the processing charge simply from the total loan approval figure which many borrowers do not expect?

Yes, it is one of the methods how creditors make sure that you don’t close the loan before. What’s more, it is also prepayment charge in disguise.

Always Go Through The Terms And Conditions

Customers do not have time and irritate when they are said to read all the fine prints of the loan agreement with tedious and boring financial jargons.

However, you must read all at least once because that’s where they hide dodgy terms and conditions to play safe.

Do not get carried away and fall for lenders with taglines ‘the offer ends today’ or ‘lowest personal loan rate of interest.’

Don’t be impetuous and simply go for the deal. Rather, analyze your loan needs, ponder over the personal loan features and then only make a decision.

Never Depend On Your Lender Alone

When you have a salary account with a bank for the past five years, and when you need some urgent wealth, your bank will certainly be your first-to-go-to lender.

You may think that you may get a better Personal Loan Rate of Interest because of your long association. It may not always be the case! Why?

Banks generally will not offer you the cheapest option for a personal loan that they will give to a new customer. It is because they think that it is easy for them to convince you to get everything that they offer!

Always do your research and compare all the personal loan offers on a third party website. Shortlist at least 3-5 lenders, make a query, and you never know, they may pleasantly surprise you with their offers. Remember that an instant loan such as the personal loan will be ready to avail online. However, that does not mean you should fall into a financial trap. Assess all the discussed instant loan mistakes that you must resolve before applying for an instant loan! All the best!

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