6 Common Mistakes People Make When Applying for a Personal Loan
Avoiding the pitfalls others have failed to avoid when applying for a personal loan is easier than it may initially sound. Take note of these six common mistakes others have made to avoid making the same mistakes yourself.
1. Not knowing their credit score
When applying for a personal loan it’s imperative to know your credit score because it plays a major role in determining the competitive nature of the personal loans you’re offered.
Checking your credit score is simple and you’ll need to contact one of the national credit reporting bodies (CRBs) to obtain a copy. The information you require is as follows:
• Your full name
• Your current and previous addresses
• Your date of birth
• Your driver’s licence details
The three CRBs you can contact are: D&B (1300 734 806), Experian (1300 783 684) and Veda (1300 762 207) – you can also contact these CRBs online – and you can access your credit report for free in any of the following circumstances:
• If you haven’t checked your credit score for one year
• If you applied for and were refused credit within the last 90 days
• If your credit information needs to be corrected (by a CRB or credit provider)
Knowing your credit score provides you with leverage and is easily obtained.
2. Applying for the wrong personal loan
Secured or unsecured? You need to understand that there’s more than one loan variety available and that some might prove more suitable for your situation than others.
3. Concentrating solely on the lowest interest rate
There’s more to a competitive personal loan than interest rates (APR) alone, so also focus on flexibility with regard to the length of the repayment term, repayment frequency and additional repayments.
4. Applying to the one bank, i.e. failing to shop around
There are so many lenders about that to limit your attentions to the one lender – often one’s regular bank – would be a serious faux pas.
When you’ve done your homework and understand the characteristics of a good personal loan start investigating banks and lenders. Whilst your regular bank might offer the best interest rates, terms and conditions, you won’t know for sure until you shop around.
5. Failing to understand how much they can afford to borrow and repay
Failing to understand how much one can afford to repay not only proves a problem after a person has successfully applied for a personal loan and has started making repayments; it also frequently presents problems when applying.
When applying for personal loans in Melbourne, the loan officer is going to want to see evidence of your income, your expenses and therefore solid proof that you can indeed afford to comfortably repay what you borrow.
Failing to understand how much you can afford to borrow and comfortably repay can convey the wrong impression and count against your loan application.
6. Not reading the terms and conditions of the loan
The terms and conditions are just as important as the APR and many people have made the mistake of not familiarising themselves with the terms and conditions of the loans they apply for and have suffered the consequences.
It isn’t uncommon for people to find themselves lost with all the ‘financial jargon’ they have to read through, though online business dictionaries can help in making sense of the terms and conditions of the loan.
Applying for a personal loan isn’t something to rush into but it needn’t entail a lengthy process either. Take note of these commonly made mistakes to avoid making the same errors when applying for a personal loan.
Author: Get Approval is an online company that can aid you in getting business and personal loans in Melbourne and other locations in Australia. They can help you get your loan approved even if you have a bad credit history.
