A personal loan may be an excellent alternative if you need quick flow of cash to pay important bills. They can easily help you bridge short-term financial shortages, like covering an anticipated bill. With lenders providing speedy disbursal and simple conditions, taking out a personal loan has become the go-to financial aid for many. You can simply apply for personal loans online, and the loan amount is released to your bank account with only a few clicks, eliminating the need for you to even see the lender in person. And cherry on the cake, Personal Loans normally feature cheaper interest rates than credit cards, especially if you have a good credit score. But while they are simple to obtain, they are subject to several tests to determine your loan eligibility. So, let’s discuss how you can avoid getting your application rejected & increase your chances of getting a personal loan.
- Check Your List of Required Documents
Most lenders need you to provide KYC (Know Your Customer) documentation together with the application form as a first step. These are the fundamental components of your loan application. If you make a mistake in this step, it may affect your eligibility and approval in following phases. Make sure all of your paperwork is in order.
While submitting your KYC documents make sure:
- Your name is the same in all the documents
- Your address proof is updated with your current address
- Your documents are self-attested before submitting &
- You collate & submit all the documents required by the lender. You can also ask for a list of documents required from your lender
- Fulfil the Eligibility Criteria
Personal loans do not require collateral because they are unsecured loans. This emphasizes the need of meeting the income requirement for the loan to be granted. To assess if you fulfil the eligibility standards, lenders consider a number of variables. Lenders look at more than just your earnings when evaluating your income. They assess the stability of your income & your debt to income ratio. They need to know if you can comfortably pay the EMIs.
Including your income from other sources (like rental income, income from investments etc.), making your spouse a co-applicant and improving your fixed obligations to income (FOIR) ratio, all can help you increase your eligibility.
- Improve Your CIBIL Score
The first thing you should check before applying for a personal loan is your CIBIL score. A score above 750 is ideal to quickly get an approval on your personal loan. You can improve your CIBIL score by removing errors from your report by raising a dispute, making payments in time on your existing debt, and keeping the credit utilization under 30% of your limit.
To guarantee that your personal loan application is approved, make sure everything is in order. Keeping the above mentioned top 3 tips in mind will help you get it right the first time and negotiate the best interest rates with lenders. Also remember, before you apply for the loan, make sure you have a clear repayment plan in place.