With easy-to-use and simplified features such as online application, instant approval & disbursal, affordable loan tenures, personal loan in Delhi, personal loan in Hyderabad or in any other city has become extremely popular among individuals. While there are various options available that can make you confident about the application process, it is crucial to remember that every lender or bank comes with its own set of distinct eligibility criteria that decides whether you qualify for a loan. Such eligibility parameters involve credit score, salary, location, age, and KYC documents.
A common misconception that applicants, particularly first-time applicants, make is applying to the lenders without knowing or checking your eligibility criteria. An applicant who submits a loan application without meeting the lender’s basic personal loan eligibility criteria would be rejected automatically. Once you are aware of the lender’s eligibility criteria, you will understand whether you can qualify for a personal loan from that lender. Ensure to always apply for the lenders where you mitigate the minimal qualifying criteria to avoid rejection of your personal loan application. Check out here some of the important parameters that would provide clarity on what you must do when applying for a personal loan.
∙ Keep all Your Finances in Check
Excellent credit history is one of the crucial criteria that lenders look at when reviewing your loan application. When you borrow the money from a lender or bank, all details regarding your repayment history get recorded by the credit bureaus like the CIBIL. A good credit score proves that you are a credible individual who can be thoroughly trusted with loan repayments. Having a positive mark on credit history not just enhances your personal loan eligibility for borrowing larger amounts in the future; lenders and banks also will provide you with a better rate of interest and repayment tenures.
However, credit score in India is not the only parameter that the lenders use when assessing your request for a loan. Other crucial parameters include your employment history, income, monthly average balance (MAB), FOIR or fixed obligation to income ratio. Lenders evaluate such factors from the applicant’s past three months bank statements. Thus, enhance your chances of availing the approval by ensuring you have nonexistent or low debts, maintaining a high bank balance and ensuring your overall expenses are low. If any of the factors are not up to the mark, try and wait for nearly 1 to 3 months to improve your finances and credit behaviour before applying for your personal loan.
∙ Factor in all Your Loan Criteria
When it is about money, we all love saving some additional funds to get a great deal. This is also very commonly found in those looking to avail of a personal loan as they are out shopping for the lowest rate of interest. While the rate of interest is a crucial parameter to consider, it must not be a deciding factor for assessing your personal loan deal. When looking for a personal loan, you must factor in the processing charges and other charges as well apart from the interest rate. You must also factor in how much would be your monthly EMI as per your repayment capacity.
Monthly EMI is also one of the important parameters to factor in as your potential to repay it with ease would impact several various other factors like credit score your eligibility to avail of the loan in future. As many applicants want to keep their thorough rate of interest low, they end up repaying much higher EMIs or lowering their balance EMIs where the initial instalments are high. Thus, when you consider a personal loan, use an EMI calculator to compute how much your EMI would come up to. Having knowledge about the EMI amount and repayment tenure as per your affordability would lower a burden on your finances or negative impact on your score.
∙ Ensure to Keep all the Required Documents Handy
Each financial institution may be a bank or NBFC, must follow a mandatory KYC procedure or know your customer process before permitting a potential seeker to use their services. The KYC is a procedure that aims at curbing fraud and verifying the customer’s identity. Being an applicant, one of the crucial things you would want is to keep all your documents handy when applying for a personal loan. Such documents are extremely common KYC documents. And the major categories of KYC documents include age proof, address proof, photo ID proof, and salary proof.
One of the common reasons that personal loan applications usually get rejected is because the applicant failed to submit the right documents or because the required documents were uploaded in the incorrect places of the online application form. You can simply avoid this by carefully going through your application form and ensuring to do a final check before sending out your application to the concerned lender.
Note that it is very common for financial institutions like banks or NBFCs to request a huge number of documents for evaluating your personal loan application, which can certainly come across to be a burden. However, the required documents for a personal loan from digital avenues like MoneyTap, upwards etc., are minimal wherein you just require submitting your PAN card, salary slips, Aadhaar card and bank statements. Such digital avenues offer a paperless process where you just need to fill-up the form and then upload your documents through their website or application.
Conclusion
Applying for a personal loan may seem confusing, but it is all about having knowledge of how a personal loan application is evaluated and if there is any area you require improving when or before applying. Ensure to thoroughly check your lender’s eligibility criteria to view if you qualify for the loan. Also, knowing on what basis the lenders evaluate your loan application makes it extremely helpful as you tend to understand what you may need to ameliorate. Remember to keep the above-listed tips in mind, and you will have a far higher chance of availing of loan approval.
Also, Read: How To Get Personal Loans to Cover Wedding Cost?
