Hyderabad: Those who are in dire need of money approach the banks and financial institutions to take loans. But, they say yes to the conditions of banks though they charge high-interest rates. Similarly, many people take instant loans as they are being offered on a platter without much difficulty. But, there is much more to it than meets the eye as loan seekers are overlooking that the burden would be high. In addition to the interest rate, processing fees and other expenses increase the debt burden.
In order to get an instant loan all you need is a mobile phone as there are many Fintech apps that are ready to lend loans. First of all, you should check whether the lending company is approved by the RBI or not. Check with which banks they tied up and do not take loans from unrecognised companies under any circumstances. If you take a loan from an illegal lending institution, the borrower will not have any rights and this can lead to serious consequences.
You should repay the loan in a time-bound manner as the interest burden is higher for short-term microfinance. If you fail to repay on time, have to pay more interest. Therefore, do not take a loan of more than Rs 20,000 for less than 90 days. It may not always be possible to repay a large amount in the short term. Before taking a new loan you should repay the old loan, or else you would end up in a debt trap.
Fintech companies are willing to lend us large sums of money on demand. But, we need to decide how much we need. Do not forget that it will be difficult to pay later if you take a large amount. Assess both your needs and ability to meet and decide how much to take.
Do not apply for a loan from two or three companies at a time. This can have a negative impact on your creditworthiness. Take a thorough look at the loan agreement as well as the application form when taking a loan. Proceed only when fully aware of the terms and conditions of banks and lending companies.
Also read: Are you worried about debt burden? Here are steps to clear them
