The demand for Personal Loans has increased due to easy availability, a quick application process, simple verification, prompt approval, and quick disbursement. However, you must pay attention to detail before applying for Personal Loans as lenders closely evaluate factors like your CIBIL score, financial situation, repayment capacity, etc.
If you are considering taking out a Personal Loan, check out these tips to increase the chances of improving your loan application.
11 Tips to Improve Personal Loan Application
Before Getting a Loan, Consider Your Need
Before taking out a loan, consider taking it for a productive purpose only. Personal Loans invite higher rates of interest due to no-collateral conditions. So, borrowing this is a huge responsibility. Apply only if you are sure to use your loan money productively.
Do Your Homework on Personal Loans
Carefully consider all lenders and settle for the one who can offer you better terms and a lower interest rate on a Personal Loan.
Maintain Credit Score
Most NBFCs and other lenders see your creditworthiness, and this is done by checking your credit rating. Any score above 750 shows you as a dependable borrower. Therefore, always check your CIBIL score and make all possible efforts to enhance it before you apply for a Personal Loan.
Additionally, make sure all debts are paid on time, clear all your outstandings, limit the use of your credit card, and don’t ask for too much credit.
Reveal All Sources of Income
Your sources of income determine your eligibility for a Personal Loan. When you reveal more than one income source, it can positively affect your eligibility criteria, is generally considered less risky, and might become an advantage during your loan approval process.
Fill Out the Application Carefully
Make sure your loan application form is complete and error-free. Provide all the required information correctly and mention the line of work you are in, your annual income, etc. Furthermore, fill in your details appropriately, as a correctly filled form ensures faster processing of your loan application.
Online procedures speed up the Personal Loan application process. Top lenders can use AI-based technology to perform instant risk profiling. After completing their verification and risk assessment, you will immediately be notified about your eligibility for the Personal Loan.
Debt To Income Ratio
You must not spend more than 40% of your salary on Personal Loan EMI payments. Borrow money only when needed. This is an essential consideration in judging your eligibility for a Home Loan. Use a calculator to assess the Personal Loan EMI payment that you can afford.
Make Sure You Have All the Loan Documents
The key to a smooth loan application process is having the correct Personal Loan documents ready – like your ID, address proof, employment certificate, proof of income, and other credentials.
The unavailability of authentic, compliant, and up-to-date Personal Loan documents can unnecessarily delay the application approval process.
Get The Right Loan Amount
It may be tempting to aim for a higher amount, but you should budget and apply for an amount you can quickly repay. This also increases your chances of getting approved for a loan.
The lender will evaluate your repayment options; asking for a higher amount may make you seem like a high-risk borrower. A Personal Loan EMI calculator can help you choose an affordable EMI and find a convenient loan amount.
Maintain A Healthy Bank Balance
When performing credit scores, lenders may examine your average account balance. If the lender finds out that the outflows from the fund are significantly more than inflows, they will be reluctant to lend to your profile because of the higher risk involved.
Avoid Multiple Applications
When facing sudden financial emergencies, you may think about applying for Personal Loans with various lenders. This makes you come across as a desperate borrower, which will lower your credit score.
Moreover, in case your application gets rejected, don’t apply for another immediately; instead, wait six months to reapply. Understand why you have been rejected and work to improve your weaknesses.
Personal Loan applications become much quicker and easier by following the aforementioned tips and techniques. By adopting sound financial practices, you ensure that your loan application is approved quickly.
Some financial institutions like Poonawalla Fincorp help you earn financial freedom via versatile personal financing at the most affordable interest rates across a convenient term. Get fast, digitised financing with flexible Personal Loan EMIs, minimal documentation, and a hassle-free process.