The ongoing lockdown and economic conditions have impacted loan processing due to limited working staff available within the banks. Availing a personal loan does not involve the requirement of collateral; you need to take care of some specific things to improve your chances. Choosing the right lender is crucial as it will ensure you get the loan that fulfils your requirements in the best possible way.
An urgent personal loan is availed to pay for any unexpected or emergency credit requirement. People often secure a personal loan to pay medical bills, child’s education, credit card bills, and much more. You can fasten the process by ensuring that you have all required personal loan documents before applying for the loan. This article will help you in employing the six smart ways that can boost the chances of approval.
6 Ways To Boost Your Chances For Personal Loan Approval:
1. Use a personal loan eligibility calculator:
The best way to know whether you will qualify for the loan is by checking out an eligibility calculator on your lender’s website. It will help you examine whether or not you meet the criteria before applying for the loan so that you can modify the values and have a better chance at availing a personal loan online.
2. Credit score and history:
Most lenders rely on credit ratings like CIBIL score to know the creditworthiness of an applicant. Lenders make a check on your credit history to see if you have a past behaviour of defaulting loans. By paying existing EMIs timely, you can improve your credit ratings, and have a better chance at availing a personal loan.
3. Choose a longer tenure duration:
Having less EMI liability will make you eligible for a loan of a higher amount. Your lender needs to ensure that you can repay the loan without defaulting, and having a lower EMI, it will be less likely for you to default. You can use an online EMI calculator to set the perfect loan tenure so that it does not hamper your budget and makes it easier for you to repay.
4. Keep low debt to income ratio:
Lenders often use debt to income ratio as an ideal indicator of whether a loan should be approved or not. Even when you maintain a good credit score, you might not get the desired interest rate on a personal loan if your debt to income ratio exceeds the limit of 40%. Having a much lower ratio will undoubtedly improve your chances of availing the loan.
5. Add a co-applicant or guarantor:
Suppose you are unable to meet the eligibility criteria of your lender due to high loan amount or low credit score. In that case, you can get a better chance at approval by having a co-applicant with good credit history, stable income, and low debt to income ratio. Keep in mind that making delay in repayments will adversely affect the credit rating of both applicants.
6. Have a decent cash flow:
Your lenders need to know about your repayment capability, and by having a fixed salary, or proper cash flow is a must to avail their trust. By giving proof of steady income through your salary slips or bank statements along with the required personal loan documents, you can prove that you have the money to make EMI repayments.
Conclusion: Even when you have an urgent personal loan requirement, make sure to take some time out to choose the right personal loan so that it does not affect your creditworthiness. Please do not apply for multiple loans at the same time as it will reduce your credit rating significantly, and your lender will think that you are having trouble managing your finances.