A personal loan is an unsecured loan as the lender or the lending organization doesn’t ask for an asset. As collateral in case the borrower fails to repay the loan amount along with interest at the tenure’s end.
It is a type of installment debt that can cover several personal expenses. And it can borrow from any commercial bank or financial institute for manifold personal purposes. The money one borrows must be repaid over time, along with interest. Some lenders do charge a fee for personal loans, such as processing fees. Check personal loan eligibility and apply for a loan online today.
1. Avoid multi applications:
Making multiple loan applications with different lenders simultaneously to get at least one approved is a bad strategy. On applying at different lenders and banks, it is more challenging for you to get a loan. Because multiple hard inquiries on your credit report and repayment history at the same time will lower your credit score.
This, in turn, gives the lender the impression that you need more than one loan to meet your financial obligations. It is best practice to maintain a six-month gap between personal loan applications. It will increase the chance of getting your application approved.
2. Apply for a joint loan with a co-applicant
Adding a co-applicant to your application may increase your chances of qualifying for a personal loan. If you don’t meet the lender’s eligibility requirements or cannot get the amount you need.
In guaranteed, co-signed, or jointly held accounts, you are equally liable for missed payments. The co-applicant reduces the credit risk and is equally responsible for timely loan repayment. Additionally, it allows you to get a personal loan of a higher amount.
3. Longer Tenure
A longer repayment term with smaller EMIs reduces the risk of default for borrowers. As they are more likely to afford their loan repayments on time. For calculating monthly payments like EMI and down payments, you can use an online EMI calculator. A personal EMI Calculator is an online tool that individuals or applicants can access to calculate the respective EMI. To pay off against the instant personal loan amount they have availed at the bank.
With repayments made in due time, it enhances your repayment track. And increases your eligibility to apply for personal loans.
4. Reviewing Credit Score:
A three-digit number called a credit score keeps track of your repayment history, and based on this score, a bank or lender checks your credibility before disbursing the loan amount. Hence, it is important to maintain a good credit score(>750).
For a personal loan, borrowers with a credit score above 750 improve. Their chances of getting approve for low-interest personal loans. Hence, it is crucial to check your credit history from time to time.
Review your credit report 3-4 times a year; otherwise, it would result in a poor credit score. Check for any discrepancy in previous transactions or credit records. If there are any such altercations, report that to CIBIL to avoid any further mishap. This is an elementary step in maintaining a pretty high credit score and enhancing the chances of getting personal loans.
5. Appropriate Debt-to-income Ratio
An individual’s debt-to-income ratio is calculated as their monthly payments divided by their gross monthly income. This ratio is one way lenders gauge your capability to repay the loan in due time, and personal loans aren’t exceptions while checking the applicants’ eligibility.
To apply for a new personal loan, the debt-to-income ratio should be lower than 40%.
In the case of a borrower with a high percentage of income used to pay off debt, it indicates possible debt overload for the income they have an inability to take on new obligations of repayment.
So, keep debt-to-income ratios low and don’t unnecessarily borrow as it can negatively affect your credit score and makes it harder to apply for personal loans.
6. Personal Loan Eligibility Criteria:
The personal loan eligibility criteria required to apply for personal loans vary from bank to bank, and consultation with them before applying is absolutely necessary. Ensure that you check out all the eligibility criteria a bank asks for before applying for personal loans because the more eligible you are, the lower interest rates and more facilities you can enjoy.
Additionally, you can use the financial eligibility calculator, which calculates your maximum loan amount based on various factors.
A personal loan gets approve and disburse faster, you provide the proper documentation. And keep an eye out for that. Instant personal loans are disbursed to salaried applicants across India via most banks and lending institutes. With instant disbursal, minimum documentation, and competitive interest rates, a personal loan is a great option to avail of. It’s always advised to carefully assess your financial situation and consult with the bank or lender before taking out a personal loan.
