Personal loans can help you turn your dreams of exploring the world or planning the perfect wedding into reality. They can also be a lifeline when unexpected home/car repairs and medical expenses make meeting your other expenses difficult. As financial services go digital, you can get funds on the go with the help of a personal loan app.
Before you proceed to click on ‘Apply’, get some crucial information about how you can give yourself the best chance of a successful application.
Know Why
You must first define your goals. For example, you may apply for personal loans to book flights and stay for a vacation or to finance your child’s education. By choosing your aim, you can select the appropriate loan amount.
Check If You Qualify
Eligibility terms differ from one financial institution to another. As a result, when you are analysing different loans, consider its criteria for approval. To check this information, go to the lender’s website or mobile app. Generally, age, income and creditworthiness impact whether or not you can qualify for a loan.
Related: Benefits Of Using Your Vehicle As Collateral For Personal Loans
Calculate the Monthly Instalments
You need to assess the EMI that you need to pay if you take a personal loan. Based on the EMI, you can make a new monthly budget and see if you can repay it effortlessly.
Such calculators are available online on websites and apps. Using them is key to compare loan offers, choosing the right loan amount and selecting the ideal tenure.
Complete the Application
Once you have chosen the financial company from which you want to get the loan, full in the form. Use a personal loan app to complete these steps online from start to finish. You can also do this on the website or by visiting a branch in person.
Submit the Required Proofs
An important part of the application is submitting the proof of your eligibility for various factors. Some commonly needed documents you need to attach are:
| Proof of Identity | Proof of Address | Income Proof | Employment Proof |
| Aadhaar and PAN card | Utility bills | Salary slips for the past three months | Employment certificate |
| Passport | Postpaid mobile phone bills | Bank Statements for the past 3-6 months | Appointment letter |
| voter ID | Passport | Income Tax Returns | |
| Driving license | Ration card |
Complete KYC Verification
Once you have submitted the documents, the lender will verify all your credentials. You may also receive a call during the verification process.
Ensure a High Credit Score
Financial companies will analyse your credit score to check your creditworthiness. If you have repaid all your previous debts on time, have experience with different types of credit and utilise credit responsibly, your score is bound to be high.
This is critical to getting an unsecured loan as the lender does not have any asset to fall back on if you default. Checking your score allows lenders to assess the risk in lending to you, and you may not get approval with a low score.
Check the Terms and Sign
The financial company will get back to you about the loan amount, interest rate, and tenure. There are several factors that influence the interest rate and loan amount offered to you. These include age, credit score, remaining working years, employer, and so on. You can choose a repayment period within the range offered by the lender. Once everything is finalised, you will sign a loan agreement.
Pay the Processing Fee
To get the loan disbursed, you will need to pay a processing charge. Once you have paid it, the loan money will be transferred to your bank account.
Don’ts When Applying for a Personal Loan
While the process may seem easy, loan applications aren’t always approved. Here are some tips that can help:
- Don’t Submit Multiple Applications at a Time
Multiple loan applications sent together may have a negative influence on your creditworthiness. Instead, conduct extensive research, choose a reputable lender, and submit just one application to the lender whose eligibility terms you can match.
- Mention Correct Details in the Application
To avoid delays, ensure that your loan application has all the necessary details.False or inaccurate data may result in your application getting rejected or delayed.Check your application twice to ensure it is error-free.
- Go with Pre-approved Offers
If you have a strong relationship with your lender or maintain a high amount in your bank account, you may receive pre-approved offers from financial companies. Usually, such offers are meant for those who fulfil the lender’s criteria. They make it easier to get a loan, so you can check if you have received such communication by email, SMS or other modes.
- Enhance Your Score
One of the most important elements affecting your approval is your creditworthiness. Your score indicates the possibility of default, with a higher score showing less risk and vice versa. The best way to conquer this hurdle is to:
- Get a thorough evaluation of your score by downloading your credit report
- Pay off your current debts on time to raise your score
Keeping a tab on your credit report is an essential and healthy financial practice. To get personalized insights on how to improve your credit score, you can install the OneScore App and get your credit score and credit report for free.
To boost your credit score, OneScore provides you with regular updates with tailored guidance. You can also set a target via the Score Planner facility, which allows you to reach your goal with ease. Download the app today to build a deeper relationship with your credit score and empower yourself financially!