5 Borrower Mistakes: What Not to Do When You Get a Loan

Microcredit today is used by many people. The rhythm of modern life is getting faster. People begin to value time and prefer services that save it. When it comes to loans, many choose financial companies. These companies issue online loans in minutes and without unnecessary bureaucracy.

Anyone between the ages of 20 and 60 can apply for a loan at any time of the day and solve their pressing problems. All you need is a passport, bank account and Internet access. No office visits, paper contracts and income statements.

It's all great and people love it. But the simplicity and convenience of the service gives some borrowers the illusion that an unsecured loan is “easy money”. People miscalculate their strength and drive themselves into debt. We list the most common mistakes made by Nonbank Financial Companies (NBFCs) customers and how to avoid them.

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  • Minimum loan term: 122 days
  • Maximum loan term: 122 days for first loan
  • Maximum loan term: 182 days for repeat loan

The loan is calculated as follows

  • Loan amount: RS 30.000
  • Loan period: 122 days
  • Consulting fee: RS 3.600
  • Service fee: RS 13.920
  • Interest rate (12% / year) : RS 754
  • Total payment: RS 48.274

Am I eligible for a loan?

You are eligible to apply for a loan if you are:
  • A citizen of Sri Lanka
  • Residing in Sri Lanka
  • Between the ages of 20 to 65 years old
  • Currently employed or generating a steady income

Mistake 1: Taking out a loan for something you can do without

Mistake 1: Taking out a loan for something you can do without

You need to be aware that a loan is a paid service. It allows you to buy a thing or use any service here and now, even if you cannot afford it. But this privilege costs money and it is better to use it when it is really necessary. Well, or if you are sure that you can repay the loan within the specified time.

A man took out a loan because the car with which he earns money needed urgent repairs. Did he do the right thing? Definitely yes. Because this is his working tool, which brings him income, and the interest paid will pay off. One of the relatives fell ill, you need to pay for a visit to the doctor and the purchase of medicines, but right now there is no money for this. Is it worth taking a loan? Yes, without thinking. Because this is not the case when you can wait or save.

Of course, there are not so urgent situations when a loan can be a justified choice. For example, you are looking for a new laptop and came across a promotion in one of the stores: a suitable model is sold at a very good discount. There are only a few pieces left, but you are missing a couple of thousand rupees. Taking out a loan for a week from the Nonbank Financial Institution can be more profitable than buying a laptop from another store at full price later. You can also "intercept" a couple of thousand before the salary, if you know that it will be the other day, you will repay the debt ahead of schedule and lose a little on interest.

You can even take out loans for the latest iPhone, expensive clothes, or a vacation abroad. Many do just that and return them on time. But these things are definitely not essentials. And, before taking such a step, you need to think carefully about whether you really need it and whether you can repay the debt on time.

Mistake 2: Borrowing more than you need

Mistake 2: Borrowing more than you need

Another common mistake is to borrow for the future. It happens that a person applied for a loan of 20,000 rupees, and a financial company or bank approved him three times as much. With many borrowers, this can play a cruel joke. Immediately there are "reasons" to master all or most of the available amount. Usually without much need. Then, when the time comes to pay, there are continuous disappointments: delays arise, new loans are taken in order to pay off the old ones. A person can gradually slide into a debt hole.

Borrow only the amount you really need. And take out a new loan only after you pay off the current one.

Mistake 3: use the services of intermediaries

There are nonbank financial institutions that issue loans online. And there are intermediaries who do not lend themselves, but bring creditors together with borrowers. The service is useful. Only some companies provide it for free - GOST FINANCE, while others charge for it, without guaranteeing the result. Turning to the latter, you will overpay the extra 3000-5000 rupees.

The sites of paid intermediaries are similar in appearance to the sites of financial companies. And it will not be easy for an inexperienced borrower to understand that he turned to them. Judge for yourself.

Here is the website of the company that actually issues loans:

robocash sri lanka

Here is the reseller's website:

sri lanka loans reseller's website

The fact that this website provides paid services is indicated at the bottom of the page in small print, which many do not notice.

It is cheaper to apply for loans directly on the websites of the financial companies themselves or use free online loan selection services. How to distinguish a paid service from a free one? The free service will not ask you for your bank card details. He just doesn't need them. An example of a free loan selection service is the Gost Finance, Ceylon Loan, etc.

Mistake 4: pay off the loan on the last day

Service is one of the main competitive advantages of such credit companies. And they are constantly working on it. Having simplified the process of issuing loans as much as possible, they are also thinking about making it comfortable to repay. Various methods are provided for this: through the user's personal account, bank cash desks, self-service terminals. But these methods do not depend on the financial institutions themselves. Sometimes the payment sent by the customer may be delayed. For example, because of the regulations of the bank through which it was made. Some banks send money within a few business days. Delays sometimes occur due to some technical difficulties or force majeure. The main thing is that they are possible. And, when repaying a loan, it is worth remembering this.

It is better to play it safe and do it 3-5 days before the settlement date. It will be a shame if the loan becomes overdue through no fault of yours and this will affect your credit history. It is much easier to ruin it than to restore it.

Mistake 5: Letting the repayment situation take its course

Mistake 5: Letting the repayment situation take its course

Loans at the Nonbank Financial Institution are a useful service. Usually they help out a lot and are beneficial for both the companies themselves and their customers. And the more conscientiously a person repays them, the more creditors trust him: they lower the interest rate, increase the amount of loans. But loans must be approached responsibly, otherwise they can become a problem.

If the client is in a difficult life situation and cannot pay, then in no case should you hide from the creditor and let the situation take its course. By taking the position of “I don’t know and don’t hear anything”, not answering calls, you will surely run into unpleasant conversations with collectors and, as a result, will most likely end up in court.

The Financial Institution is not interested in their borrowers having delays. Therefore, companies are ready to enter into the position of customers by offering them prolongation and restructuring of loans. But only to those who come into contact with them.