With digitized processes and instant approvals, a personal loan today is one of the easiest and most convenient ways to fix your immediate financial concerns. Usually a personal loan is sought when the need of money is urgent, like in cases of medical emergencies, home renovations, impromptu trips, weddings etc. To ensure your personal loan is approved in quick time, here are 5 simple tips to follow:
Know your Credit Score
Your credit score, which is based on your credit history, plays a pivotal role in ensuring that you get approved for a personal loan. A high credit score i.e. one which is closer to 900 implies that you have excellent chances of being approved for a personal loan while a score closer to 300 implies that your chances of approval are slim. Paisabazaar.com enables you to see the chance of approval against each loan option, according to your credit score. This allows you to apply for a loan from a bank where the chances of approval of your loan application is high.
You can place a request for your credit score with one among the 4 credit bureaus operating in India – CIBIL TransUnion, Experian India, Equifax India and CRIF HighMark. At present, you can get your Experian and Highmark credit reports for free from Paisabazaar.com, along with 12 monthly updates, while the other reports can be availed for a fee of approximately Rs. 500 from the respective bureau website.
Carefully Consider the Loan Amount
Applying for a high loan amount often leads to rejection of your application. As a thumb rule, banks are wary of lending to individuals who are currently paying multiple EMIs. Moreover, the maximum loan amount that you are eligible for would be equal to a specific portion of your annual income minus the outgo for existing liabilities i.e. loan repayments. It is therefore a good idea to use a loan eligibility tool to zero-in on a loan amount that you will be eligible for and can also afford. In some cases, the lender might be willing to sanction a higher loan amount; however, it’s best to stick to the amount you actually need.
Compare Options before Choosing
Most applicants base their choice of a personal loan based on one key feature – the interest rate. Instead of having such a myopic view, it is a better ploy to consider additional factors such as loan tenure, maximum loan amount, processing fees, pre-payment/foreclosure charges, etc. before you decide on a personal loan offer. Aggregators like Paisabazaar.com help you compare various loan options on key parameters. This will help you choose a loan option that is most suitable to you and you are eligible for, leading to quick approval and disbursal of the loan amount.
Ensure Submission of all Relevant Documentation
Personal Loans feature some of the simplest documentation requirements among various loan options; hence there is literally no margin for error. Make sure you read through the documentation requirements carefully before you submit your application and double check to ensure that all relevant documentation is attached / uploaded with your application form. Proper documentation will lead to quick disbursal of funds. If you miss any of the documents your loan processing time will stretch and times, your loan application may also get rejected.
Avoid simultaneous applications
Every personal loan application generates a credit report request from the prospective lender. This is termed as a “hard look” and the details of this credit report request show up on your credit report with date when this check was requested and purpose. If multiple queries are generated simultaneously, your report will show details of these requests within a short interval. This is deemed as “credit hungry” behavior by prospective lenders and can lead to rejection of your personal loan application. Getting rejected for a loan is a sure shot way to tank your credit score and would decrease your chances of being approved for new credit in the future.
This short list is aimed at improving your chances of being approved for new personal loans. However, the same logic holds true for other forms of credit such as – home loan, car loan or credit card among others.