According to the RBI, the personal loan witnessed a Y-o-Y growth of 13.5% in March 2021. This implies a significant demand for personal loans to cover the financial gap in this current global health and economic crisis. A personal loan is a viable option for individuals willing to meet immediate cash crunch as applicants can receive a sizeable fund without pledging any asset.
If you plan to apply for a personal loan from your preferred personal loan app, read this article to increase the chances of getting your loan approved.
5-step wise guide to avail personal loan from mobile applications
Take a look at the following pointers to get a loan from a personal loan app within the least possible time:
Step 1: Check your credit score
A CIBIL score summarises a borrower’s credit history. A credit score ranges between 300-900. Applicants with a credit score of 750+ can get approval for the personal loan in the least possible time. Moreover, they can negotiate with their lenders for a competitive interest rate.
Borrowers with lower credit scores may face rejection for their loan applications or get a higher interest rate on a personal loan. Some of the best ways to improve one’s credit score are –
- Repay the outstanding dues in time
- Maintain the credit utilization ratio at 30%
- Check the CIBIL report frequently to avoid errors.
Step 2: Employment status
Financers prefer individuals with regular and fixed streams of income as it implies their strong repayment capacity. Selected lenders also favour applicants employed at an MNC, private or public company. Individuals must check with the lender if there are any additional eligibility parameters to meet before applying for a personal loan.
Step 3: Avoid multiple loan applications
One of the easy approval tips for a personal loan is to avoid multiple loan applications. Each time an individual applies for a loan, the financer enquires about the credit report with the credit bureau to check his credit score. These are hard inquiries and negatively impact one’s credit score.
Moreover, lenders also check the debt-to-income ratio. A higher debt-to-income ratio increases the risk of default in repayment. If the debt constitutes more than 43% of an individual’s income, then the chances of a financer not accepting the loan application is higher.
Step 4: Documentation process
Every lender requires documents to process the loan application. Take a look at the following primary documents that are necessary while applying for a personal loan–
- Employee ID
- Bank statement of the last three months
- Last two months’ salary slips
- KYC documents, such as Aadhaar cards, PAN cards, etc.
Individuals must keep all these documents ready to avoid inconvenience and get quick approval for a personal loan. Selected financial institutions like Bajaj Finserv offer a high quantum personal loan to salaried employees at a nominal interest rate with minimal documentation. They also extend pre-approved offers to existing customers. These offers are also applicable to several financial products, such as personal loans, business loans, etc. These offers also streamline the application process. Willing individuals can check their pre-approved offers by entering their name and contact number.
Step 5: Evaluate loan affordability
Before applying for a personal loan, applicants must plan for its repayment in advance. Individuals can use a personal loan calculator to evaluate the monthly installments at first and prepare for repayment accordingly. Additionally, one must also consider other financial obligations, such as existing debts, to avoid financial inconvenience later.
To conclude, one must keep these pointers in mind before availing of a personal loan. Besides, it is essential to check the credibility of a personal loan app from where you plan on applying for loans.
Applicants must check whether the platform is authorized by the RBI. Lenders must comply with the necessary licenses and registration to ensure a transparent process in the loan application. Every reliable financial institution carries out KYC verification before disbursing credits.
Hence, individuals must go through the lender’s website or personal loan app to check all the information to make an informed choice.