7 Common Personal Loan Mistakes
At some of the other point in your life, you will probably be applying for a personal loan to finance an exotic vacation to Hawaii or purchase that home theatre you always wanted. Canada online loans can be a great tool to help you reach your goals faster. However, it is essential for you to be very cautious when applying for and availing a personal loan.
There are a few common personal loan mistakes people make that end up causing them to struggle with their repayment installments, or land them into a huge debt from which it is impossible to recover. Let’s have a look at a list of seven common mistakes that people tend to make while availing a personal loan, or an installment loan.
Grabbing the first loan that is offered
Since a personal loan is an unsecured loan which does not require you to provide collateral, the rates of interest are typically higher. It is therefore advisable to do a comprehensive research of the product and company before you sign on the dotted line. Cashco Financial offers flex loans that are very consumer-friendly. Flex loans come with a low annual interest rate, and are our own version of installment loans. You must refrain from rushing into the application process and actually spare a few days examining and comparing the plans thoroughly before signing up for the one that is perfectly tailored according to your needs and requirements.
Accepting unachievable repayments terms
A personal loan is meant to ensure that you lead a life of a superior quality, free of any financial stress or worry. Often people end up agreeing to terms that are not only difficult for them to follow, but also end up locking them up in a vicious circle of missed repayments and unaffordable interest. There are numerous personal loan plans available, including installment loans, on the market that can be customized as per the requirement and convenience of the applicant. It is best for you to do all the calculations beforehand and determine a repayment schedule and tenure that is both feasible and affordable for you. Cashco flex loans are flexible to fit your needs specifically.
Over extending yourself
More often than not, people tend to think that a personal loan is more or less ‘free money’ that can be casually spent immediately after getting it. However, you must remember a simple fact that you will be ultimately responsible for repaying whatever you borrow. The idea is to establish exactly how much money you require at the moment, and stick to the figure without falling into the trap of overreaching. One of the common mistakes that people make with installment loans is to over extend their budget and go for a relatively higher personal loan amount that later becomes difficult to repay.
Taking too many personal loans
Since some finance companies do not require you to specify the reason for taking a personal loan, there is practically no limitation of how you make use of that extra money. Cashco Financial believes that you should never take more than one short term loan or long term loan at a time. This applies to installment loans, term loans and especially payday loans. You can apply for a personal loan for a variety of reasons such as a wedding, a medical emergency, a household purchase or a foreign trip. However, you should refrain from this habit of applying for personal loans for flimsy reasons that do not really require you to borrow. Having more than one personal loan to pay back, can lead you to struggle with your monthly finances, and fall behind on your repayment installments that will in turn have a negative impact on your credit score as well. If you are looking for an installment loan with flexible terms that can actually help your credit score, then a Cashco flex loan is the personal loan for you.
Neglecting the fine print
Quite often, applicants are in such a hurry to get the money that they end up signing up the loan agreement form without going through the details mentioned in fine print. However, this practice is extremely dangerous at many levels and puts you at a grave financial risk. The fine print comprises of the basic terms and conditions for your loan agreement that establish the boundaries and limitations in the event of a conflict or dispute between the applicant and the finance company. By recklessly signing on the dotted line, you confirm your obligation to fulfill the terms and conditions of the agreement even without knowing what is mentioned in it.
Opting for a long tenure
Sometimes lending companies offer a maximum tenure on personal loans of up to seven years. However, if you intend on opting for the maximum tenure just so that you get extra time to repay it, you may be making a mistake. The fact is that the longer your tenure is the higher number of installment payments you need to repay to the bank.
Ignoring your credit score
A bad credit rating could actually cost you thousands of dollars in finance charges. The lending companies charge a higher rate of interest from a person who has a poor credit score, in order to cover for the risk of defaulting on his repayment that he poses to the company. You must check your credit score before applying for a personal loan and take correctional measures such as paying off your debts or credit card bills in order to raise the score if it is low. Installment loans like Cashco flex loans actually work to improve your credit score while you have the loan. This can be very beneficial as flex loans allow you to get the money you need today and improve your financial standing tomorrow.
By avoiding the common mistakes outlined in this article, you can prevent yourself from both compromising on the security of your personal loan and paying back more than you can afford in the long run.