Making mistakes is a natural part of life, especially when it comes to dealing with banks and insurance companies. Unfortunately, many applicants make common mistakes when applying for any loans, whether it is a housing loan or government personal loans. They cause them to lose hard-to-get financing, which means failing to get funding for the projects that are important to them.
Here are six common mistakes people make when applying for government loans in Malaysia so that you don’t make the same ones.
Skimming Through The Terms & Conditions
Many of us are used to just clicking the ‘I agree to the terms and conditions’ button without actually reading it. However, it’s important to read and understand it while also reading the fine print to avoid overlooking any important information.
You should also make sure that you truly understand the repayment schedule and how much you will be paying each month. If you aren’t 100% sure of any part of the contract, ask questions. One of the most crucial things to watch out for is whether or not there are any penalties for early repayment or prepayment. Plus, you need to know exactly how much you will be charged in interest and whether or not there are any additional fees involved with applying for this type of loan.
Always Read The Terms & Conditions For Any Type of Loan Including A Government Personal Loan or Housing Loans
Forgetting To Lock In The Agreed Upon Interest Rate
A lot of people forget to lock in an agreed fixed interest rate. You could be subject to hidden extra fees without locking in this rate. If you don’t lock in an interest rate and the prime rate increases, the lender will also increase your interest rate. The same goes for a decrease in the prime rate: you will have to pay more for your loan if it falls below what you agreed upon.
When you apply for a small business loan, make sure to speak to an expert at your bank or financial institution about their rates and fees before committing yourself to a specific amount or term. This way, you’ll have time to look around and find the best terms available before signing anything.
Always Remember To Agree On A Fixed Interest Rate With Your Desired Loan Tenure
Not Researching Multiple Loan Options
Researching and comparing your options should be one of your first steps. Many people make the mistake of only looking at one type of loan. There are many different loans available, and each one comes with its own pros and cons. It’s crucial that you fully understand what they all entail before deciding.
For example, some lenders will offer better interest rates than others. Some may be able to provide lower down payments or higher credit limits. Some lenders may require collateral, while others may not. Some lenders will allow for flexible repayment plans, while others will have stricter payment schedules with penalties if the borrower misses a payment by even one day.
By researching multiple options for your business loan, you can find the best choice for your needs and circumstances. This can possibly save you time, stress and money in the long run when it comes to borrowing money for your business venture.
Not Updating Your Finances
The process of applying for a business loan is not an easy one. It requires so much effort and time to prepare for it that many people don’t do it right and end up with bad credit or no credit at all. No matter what loan you apply for, you need to show up prepared with all the necessary paperwork and updated financial information.
Applying Without A Thorough Business Plan
A lot of people make the mistake of not having a thorough business plan before applying for a government business loan. This is a huge mistake because, without a good business plan, it would be difficult to convince the lender that you have what it takes to run your own business.
If your company has been around for a while and you know exactly what you’re doing, then you might be able to scrape by without writing a business plan. But if you’re a small business and this is your first time applying for a loan, writing one will definitely help your application.
Applying Without Collateral
A business loan without any collateral is basically a personal loan, except that it involves a business. The bank will ask for the same documents as a personal loan, such as your credit history and income statement. This is because banks want to see if you have enough money to pay back the loan.
Bank Loans Without Collateral Are Not Business Loans
If you do not have any collateral, the financial institution will be hesitant to lend money to you because they worry that you might not pay them back. It is important to understand that even though you may be able to afford to make the monthly payments on your business loan, you still need some security in case something happens and you cannot make those payments anymore.
Applying for a government business loan can be difficult and frustrating if done the wrong way. However, if you know the right steps to take, getting a government business loan will be a lot easier.