Top do’s and don’ts to follow before you apply for a personal loan.

The presence of loans is no less than a gateway in our lives to fund borrowing requirements. Amidst the wide range of loan options to choose from, the presence of a long list of unmissable benefits yielded by personal loans, including quick disbursal of required funds, zero restriction on end-usage of loan proceeds, a minimum requirement of documentation and absence of any security or collateral to be pledged, make them a suitable and popular credit option to fund urgent financial requirements. 

Here is the top do’s and don’ts to never ignore if you are planning to avail a loan from Moneyview:

Do’s

Review your credit profile

 Whenever you apply for a loan, lenders evaluate your creditworthiness by fetching your credit report. Some lenders have even gradually begun practising credit risk pricing, wherein they factor in the applicant’s credit score for setting the loan’s interest rates. Those with higher credit scores can avail themselves of lower interest rates and vice versa. Hence, reviewing your credit report before submitting the Moneyview loan application can prevent any such possible error from getting bypassed and reducing your credit score, which would thereby adversely impact your loan eligibility and approval chances as well. Make sure that you report the errors, if any, to the concerned bureau and lender for getting the rectification done at the soonest. 

Also, remember that your credit score is calculated based on the information mentioned in your credit report by existing lenders and credit card issuers. Any clerical error or fraudulent transaction can unnecessarily drag down your credit score and, thereby, your personal loan eligibility. Hence, ensure to review your credit report at periodical intervals to identify and report such information to the credit bureaus & lenders for rectification. A rectified credit report will automatically report a higher credit score and improve the chances of approving loans from Moneyview and other prospective lenders.

Factor in repayment capacity when choosing tenure

Lenders to assess your repayment capacity by computing your EMI to Income Ratio (FOIR), i.e. the ratio of your existing income and debt repayments, including credit card bills and loan EMIs. While the applicants containing this ratio within the required range as stated by the lender (including EMI of new loan) are  preferred when taking a Moneyview loan, make sure you opt for a loan tenure whose corresponding EMI keeps your FOIR within this range. With personal loans usually involving tenure of up to 5 years, borrowers whose repayment capacity is low can opt for a longer repayment tenure to avail lower EMI amount. 

However, as zeroing in on a longer repayment tenure results in relatively higher total interest cost, consider prepaying your personal loan whenever you have surplus funds. But while doing so, ensure the overall saving in interest cost significantly outweighs the prepayment charges levied by your lender, if any.

Compare amongst various lenders

The loan segment is a highly competitive industry in the financial sector, with almost all banks, upcoming and existing fintech and numerous NBFCs offering them. Thus it becomes imperative to compare as many lenders as possible to choose the lender and product based on your eligibility criterion and requirement. Taking a Moneyview loan not only offers you a quick eligibility check,hassle-free paperless documentation but also hold the openness to lend to those with no or low credit score, and offer the benefit of an online EMI calculator tool. 

Don’ts

Submitting loan applications to many lenders in a short span

As soon as you submit a loan application directly to lenders, they initiate credit report requests from credit bureaus to evaluate your creditworthiness. Such lender initiated requests are termed as hard enquiries, and each of them gets listed in the enquiry section of your credit report, leading to a drop in your credit score by a few points. Moreover, submitting multiple loan applications within a short span can significantly reduce your credit score. Therefore, it’s always advisable to compare and choose the lender after thorough research and then submit an application to the selected one.

Unstable employment history through frequent job switches

Lenders often take into consideration the applicant’s employment history and stability while evaluating their personal loan eligibility. As the practice of frequent job-hopping may be considered as a sign of career instability by lenders, they may hesitate in lending to those applicants who frequently switch their jobs. Hence, before submitting a loan application to Moneyview. Try to refrain from frequent job changes, especially in the recent past, when planning to take a loan in nearing days/months.

Ignoring alternative loan options

While looking to avail a personal loan to meet urgent monetary needs, do not commit the mistake of ignoring other alternative loan options, such as secured loan options, gold loans, top-up home loans, etc. These loans also possess the feature of not having any end-usage restrictions and usually come with lower Personal Loan interest rates and longer tenure options than personal loans. 

Over-borrowing

Another mistake to avoid when taking a Moneyview loan is borrowing more than the actual requirement. This holds true especially for those having higher repayment capacity, who get tempted to avail a larger amount of loan upon knowing their high loan eligibility. Such people tend to forget that availing loans, especially relatively costlier ones like personal loan, involve interest cost which needs to be repaid along with the borrowed principal. The higher amount you borrow, especially beyond actual requirements, the more additional interest cost you incur, thereby taking away a higher amount of money from your pocket. Over-borrowing can even push you towards straining your financial health to repay the borrowed loan, thus causing a possible threat of increasing the risk of default. Hence, when taking a loan from Moneyview, ensure to borrow only the amount you require and would be able to repay comfortably.

Summing it up

More often than not, most of the people end up serving one or multiple loans during their work-life years, whether it’s personal, home, car or education loans. All these are aimed to solve different financial goals in life. And with personal loans having no restriction on the end-use of funds, they are often the most popular credit source. Hence, whenever you require such a loan, do not forget to check the Moneyview loan before zeroing in on any lender.