Personal loans come in handy in times of need and when you’re short on cash. These may be obtained with little paperwork and no collateral. With so many banks and non-bank financial institutions (NBFCs) aggressively marketing rapid personal loans, obtaining a personal loan authorized seems like child’s play. When you apply for it, however, there may be various qualifying restrictions, terms, and conditions that financial institutions do not reveal up front, resulting in loan processing delays.
Because so many individuals apply for a personal loan when they need money right away, it’s important to avoid any delays by following these guidelines:
Boost your credit rating
A credit score is a three-digit figure that indicates how well an applicant has managed his or her credit. Lenders use it to assess the risk of default and to learn about the applicant’s financial discipline. A 750-point score or greater is good. To begin, determine your credit score and, if required, improve it by paying existing EMIs and credit card payments on time and keeping your credit utilization ratio low. A good credit score improves your chances of getting a personal loan and, maybe, the best interest rates.
Maintain a consistent work history.
Lenders want assurance that you’ll be able to repay the loan, so they search for consistent salary history to see if the applicant will be able to maintain a financially stable future. They prefer a candidate who has been in the same position for a long time and does not change jobs frequently.
Add a co-applicant or guarantor to your application.
If you don’t have enough income or a bad credit score, or if you don’t fulfill any of the lender’s other requirements, you can apply for a joint loan with a co-applicant who has a strong credit history and a steady income. As the co-applicant will be equally obligated to repay the loan, this will assist to reduce the credit risk. A co-applicant also enhances the chances of a larger loan being approved.
Multiple applications should be avoided.
Filling out many loan applications gives the message that the applicant is desperate and paints a negative picture of their financial status. In addition, every loan application denial lowers your credit score, making it much more difficult to secure a loan in the future.
Keep a cooling-off period in place.
If your loan application is turned down, wait at least six months before applying again. Rushing into loan applications will suggest that you are desperate, but pausing for a bit and then applying again will show that your finances are solid enough to have gone this long without a loan.
Choose a longer payback period.
Lenders assess your present monthly repayment responsibilities when analyzing your loan application. If your monthly commitments total 50% of your net monthly income, including the EMI for the loan you’re applying for, you’ll have a better chance of getting approved. If your monthly repayment responsibilities are larger, choose a longer term to lower your EMI.
While getting a personal loan may not be as simple as it appears, following all of the above recommendations will help you get one authorized swiftly. We recognize that a personal loan is necessary for most instances, but we recommend that you do not apply for one in a rush. Instead, conduct your homework and apply to the lender who best fits your eligibility and criteria. Furthermore, read all of the terms and conditions, as well as fees and charges like processing fees, prepayment fees, and foreclosure costs, in advance to avoid any unpleasant surprises later.