5 common mistakes to avoid during applying for a loan

There are different types of loans and different channels to get them. To choose the right option, you have to know the details of the product and the commitments you make. In the application processes, mistakes are made that have consequences for the beneficiaries; if you know them, you can avoid them and choose the advance that suits your circumstances. It is difficult for us to act with a cool head when we need an advance to escape a setback, develop a project or acquire a product or service. Money is sometimes personal, and not controlling this situation causes us to make mistakes. When you ask for a loan from ikano, you should avoid some situations such as requesting an advance that you don’t need, not reading all the conditions or signing the delivery of a very high amount. But there are also other mistakes that you can’t make if you don’t want to have financial or legal problems. 

The best way to avoid mistakes when applying for loans is to leave behind impulsiveness, especially, when considering personal loan in Singapore. Before going for your advance, think about your financial situation and how you will use the loan. Once you have clarified those points, remove these behaviors from your request. The 5 common mistakes to avoid during applying for the loan are as follows:

• Request quantities that are not necessary currently

You can get good loans under very favourable conditions. Still, you should not get carried away by this circumstance and request a very high amount that you do not need. Behind the advance are debts and interest. The more you request, the more you will have to pay later. Therefore always apply for the quantity of money you need.

• Not knowing the usual rates.

The other common mistake that is made while applying for loan does not know the usual rates. The commissions of a loan depend on the entity from which you request it. If you go to a bank, you must know the Annual Equivalent Rate (APR), which comprises the sum of the expenses generated by its opening, the insurance associated with the product or its possible cancellation. You should also know about the Nominal Interest Rate (TIN), which is the percentage that you pay for the loan, and that is extracted from the amount you have advanced. This payment is also included in the APR.

• Sign products that have nothing to do

Sometimes, banks offer other linked products that have nothing to do with the loan, arguing that the interest will be lower. If you find yourself in this situation, you should be alert, assess if that other product interests you and request that the price reduction of the loan be in writing. 

• Choose the longest return period.

There is the false belief that it is best to apply for loans that have a very long repayment period and thus have more time to pay the debt. Nothing is further from reality. The best thing to do with debt is to cancel it as soon as possible.

If you need the money and think you can return it in 1 or 2 months, choose this option; you will avoid future problems, you can request a new loan if you have a setback, and your finances will be more liberated.

• Sign without understanding the terms and conditions of the loan agreement

Signing the loan agreement without properly the terms and conditions of the lender could be risky. The procedure to get a loan is more than mere taking the papers and explaining your business model (if applying for business loan) and other necessary details. Read the agreement well and if you have any worries about any point related to loan, clarify them before committing. Don’t sign the agreement until or unless you are satisfied with the terms and conditions of the agreement.