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Published:September 13, 2024

6 Mistakes to Avoid When Applying for a Loan

It is completely normal to have doubts when applying for a loan. It could be that you’re about to entrust personal information to a stranger, get scammed, or the possibility of going through all processes just to get declined. 

The key to be confident in making financial decisions is simply being aware not only of the best practices when looking for a loan but also of the mistakes to avoid.  

1. Wrong or Incomplete Information 

Regardless if you’re applying at the branch or online, always make sure that the information you provide is correct and complete. Double-check everything you wrote/typed. Some applications do not allow you to proceed to the next step until you’ve filled out all the required information. Also, providing wrong information intentionally or unintentionally would mean there might be inconsistencies with your application; thus, affecting the results of your application. 

2. Having an Insufficient Source of Income  

One of the very first things financing companies will consider in your application is your source of income. That’s because they need to check if your income is enough to pay for your monthly repayment. If you want to build a stronger profile, you might want to include other sources of income in your application.

3. Lack of Requirements

Try to be mindful when financing companies discuss their loan requirements with you. Don’t be afraid to ask questions if this is the first time you’re asked to submit such documents. Companies can’t proceed with your application if you lack the necessary requirements. In most cases, this causes delay in processing and releasing the loan, but in some and worse is if it will be the reason your application gets denied.  

Just be prepared to present documents that prove your income or capacity to pay and government-issued IDs to prove your identity. 

4. Not Knowing Your Priorities

Another common mistake is not accurately estimating the loan amount you need. Borrowers tend to overestimate their needs, which can lead to higher loan, higher monthly amortizations, and of course, more debt than necessary. It’s important to accurately calculate the cost of the purchase and only borrow what you need. 

 

A common mistake people make when applying for a loan is not budgeting just how much they need. 

5. Submitting Multiple Loan Applications at the Same Time

Another common yet understandable mistake people make is sending numerous loan applications at the same time. While there’s nothing wrong with increasing your chances of approval, you need to make sure that you properly assess your income and financial assets before applying. Remember, financing companies check the candidate’s credit history, documents submitted, and if they the minimum salary requirement.  
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On the bright side, getting rejected from a loan doesn’t mean you can’t re-apply if your financial situation improves.

6. Terms and Conditions

Who reads the terms and conditions, right? You. You should read it from top to bottom so that you know exactly what you’re getting yourself into before you sign anything.  

Have a final run-through on everything and ask as many questions as necessary until you fully understand your loan terms. Remember, loan repayments are a long-term deal with your lender so you want to make sure you can fully commit to it. The last thing you want is to overlook this step and face possible financial and legal consequences in the future. 

To sum it all up…

Loans help you attain immediate financial resources to achieve your goal or in case of emergencies. It takes strong financial discipline to consistently repay it, as part of your commitment when you signed the terms.  

Part of Cepat Kredit’s goal is to help you avoid financial mistakes so that you don’t go into further debt and that you know how to handle your finances while achieving your purpose of applying for a loan. If you’re an Overseas Filipino Worker (OFW) or seafarer, check out the best loan product that works for you by visiting the Product Page

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