An engineer loan is very important for both salaried and self-employed engineers. For the former, this loan could be required for medical emergencies or to fund a marriage, vacation, home renovation, etc. In the case of a self-employed engineer, he might require a loan to buy some new machinery for his organization or to pay for other costs related to his business.
When taking such a professional loan, it is important to show prudence. You must show that you are committed to repaying the engineer loan that you took and that goes mainly for self-employed engineers. They do not receive a fixed paycheck and hence a promise of some kind of commitment is very important.
The 5 Deadly Mistakes
1) Not taking your time:
This is very important because for an engineer education loan because settling for the first lender who agreed to offer you a loan is just plain bad business. One must dig deeper and check every other loan offers to decide the best one for him. This could potentially lead to saving a lot of money and as for an engineer every penny is precious. Other than choosing the offer with the best engineer loan interest rate, one must also look at the various terms and conditions that will not only help the borrower to benefit from the financial part of the loan but also other subsidiary problems that might arise.
2) Don’t reduce your Credit Score with unnecessary loans:
The borrower’s credit score is very important when applying for a loan. Every lender will check the applicant’s credit or CIBIL score. This score determines how good you are at paying back your loan. If your score is low then it will just mean that the amount of money you can borrow will decrease and at the same time increase the engineer loan interest you will have to pay. On the other hand, if your score is 750+, you can get any type of loan you want couples with a very good interest rate. So always try to pay off your bills and loans before they are due and you will have an impressive credit score.
3) Applying for multiple loans:
If you think that applying for multiple loans will increase your chances of approval, then you are wrong. Once you apply for a loan, the lender will have a background check made on you and having multiple pending loan approvals will reflect very badly on your credit score. This could even lead to getting rejected for all your loan requests which would stain your credit score even more.
4) Not checking if you fit within the eligibility:
Before applying for a loan you must check the eligibility criteria pertaining to that loan. Now eligibility criteria differ from lenders to lenders but it is always wise to check whether you are eligible or not before applying. In most cases, people are rejected because of paying back issues. In some cases, you must earn a certain amount before you can request a certain amount of loan.
Listed below are the common eligibility requirements to avail an engineer loan:
- Applicants need to be within the permitted age range of 25 to 59 years
- He/she needs to be a salaried, consultant or self-employed engineer
- Salaried individuals have to fulfill the minimum work-experience requirement of 3 years
- Self-employed applicants too need to have a minimum self-employed work experience of 3 years
Apart from the eligibility criteria, engineering loan also requires minimal documentation. For example, if you want to avail this loan from leading NBFCs, the documents required are:
- KYC documents
- Engineering degree certificate
- Bank statement of 3 months
- Salary slips of 3 months
- Passport-size photograph
Self-employed engineers along with the above documents need to produce proof of business vintage of at least 3 years. The documentation process is quick and easy with doorstep pick-up of documents. Also, once everything is in order, the loan is disbursed within 24 hours.
5) Not reading the terms and conditions of the loan carefully:
Reading in between the lines in case of a professional loan is very important. The terms and conditions must be read very carefully. This step is very important because engineers are often misguided about the rules and regulations and the final terms are nowhere near the initially accepted terms. It is the borrower’s duty to double-check everything so that there is no hidden cost anywhere.