Going to take a personal loan? Avoid these costly mistakes, otherwise EMI will become a burden!

Suddenly there is a need for money? No problem! Nowadays, personal loan comes into your account as soon as you press a few buttons on the phone. It sounds so easy, doesn’t it? But this ease sometimes becomes a costly trap for us. Often we see the message of ‘pre-approved loan’ from the bank and take the loan without thinking anything. This is where we make the biggest mistake. The interest rates on personal loans are much higher than other loans and our small mistake becomes a burden for years. In fact, the difficulty lies not in taking the loan but in the hasty decision. Let us have a look at the common mistakes that almost everyone makes while taking a loan.1. The “low EMI” scam is the most common trap. We feel that the loan with lower monthly installment (EMI) is cheaper. But this does not happen. Banks increase the tenure of loan to show lower EMI. The installment may seem small, but in the long run you have paid many times more interest to the bank. Understand it this way: Suppose you took a loan of Rs 3 lakh at 12% interest. If you repay it in 3 years, you will have to pay interest of approximately Rs 60 thousand. But if you choose the option of 5 years for low EMI, then this interest will cross Rs 1 lakh. What to do? Always look at the total amount of the loan, not just the EMI. If your budget allows, always choose a shorter tenure. 2. Blindly trusting only one bank: We consider the offers of the bank in which we have an account to be the best. This is our second big mistake. There are many banks and NBFCs in the market today. It may be possible that some other bank is giving you loan at 1-2% less interest. This 1-2% sounds small, but it can save thousands of rupees on the total loan. Not just the interest, there is also the processing fee (1-3%), GST and other hidden charges. Therefore, before settling on any one offer, check with at least 3-4 sources. 3. Ignoring the fees and terms and conditions: Often we sign the loan agreement without reading it. We do not pay attention to important things like processing fees, late payment penalty and charges for pre-payment (premature loan repayment). Imagine, if there is a 2% processing fee on a loan of Rs 3 lakh, then only Rs 6,000 will be deducted in your hands. Not reading these small conditions will prove costly later. 4. Borrowing without any plan: As soon as the loan money comes into the account, it is spent immediately. It feels good at that time, but the real burden is felt when the EMI starts decreasing from the next month. Taking a loan without preparation can spoil your entire budget. Always make a plan. Set auto-debit to repay the EMI and always keep aside money equal to one or two EMIs for emergencies. Remember, missing even one EMI can take your credit score down badly. Always take loan for your needs, not for your desires.