A personal loan can and has been a game-changer for many who have needed extra money at some point in time to meet personal requirements. Be it a wedding, medical emergency, vacation, or just about anything else, an easy personal loan can help provide much needed financial help.
Be it cheap personal loans, or large ones, let’s first look at what a personal loan is and some of the ways you can get quick approval online:
Why Are Personal Loans So Popular?
The popularity of personal loans has grown over the years, and most people want to get them when they need urgent money. Not having to put up any collateral is one of the main reasons these loans are so accessible, and people can repay them without having to worry about losing valuable assets.
Ways to Get Personal Loan Approval
Many factors come into play before a lender approves an application for a personal loan. It is essential to follow the steps to increase your chances of getting approval:
- Eligibility Criteria of the Lender
You should study the eligibility criteria in depth. Make sure to look for income, age, employment etc. Also, make sure to use an online calculator to find out if you are eligible.
- Don’t Overspend
When you get a loan sanctioned, the immediate urge may be to spend the whole amount directly, but you must refrain from doing so. The credit utilisation ratio plays an important role, and maintaining a good ratio will mean better credit scores and easier access to future loans.
- Check Payback Capabilities Before Applying.
Once you have decided to get an easy personal loan, you should check the amount of loan you are looking for and always stay within budget. Use an online calculator to find out the repayment amount every month, get a clear idea of your EMIs, and plan your repayment accordingly.
- Started a New Job? You Can Still Be Eligible.
You might have heard often that you should not apply for a loan when starting a new job, but this is untrue. If you have different income sources, you can apply for cheap personal loans and get one approved.
Usually, lenders look at the company you are working in; for instance: if your new job is in a big MNC, your chances are better.
- Your Credit Score Matters
When applying for a personal loan, you should always ensure that your credit score is good (>750). This will ensure you are sanctioned the loan as credit scores play a huge part in deciding the eligibility and approval of any type of loan.
- Don’t Make Multiple Applications
When people try to get a personal loan, they may be inclined to make multiple applications and apply on every app. But when they do, lenders make an inquiry with credit score companies. Your credit score is negatively affected when multiple lenders make inquiries about your credit score.
- Present a Co-borrower
In case you are not eligible to get a personal loan by your own income and credit score, there is another option. You can add a co-applicant, such as your parents or your spouse. This way, if you have a low credit score, but they have a higher credit score coupled with more income, you are sure to get a personal loan sanctioned at competitive interest rates.
- Mention All Your Income Sources.
When applying for a loan, you should always fill out all the income sources you have to your lender as lenders always look out if you can repay your loan on time, and by doing so, you are providing a surety to the lender. This increases your chances of getting a personal loan sanctioned without any hassle.
- Always Provide Correct Information.
Verification is key to getting a loan, so you should always maintain correct information on your loan application. With that, you need to keep your documents in hand. The most common documents are:
- Age proof and identity
- Loan application filled with photo
- Residence proof (electricity bill, passport, voter id, Aadhar, gas bill, or water bill)
- PAN card
- Last 3 months’ bank statement
- Last 3 months’ salary slip
- Income tax returns for the last 3 years or Form 16
- Check Your Debt-to-income Ratio
Your debt-to-income ratio defines the amount of disposable income you are left with after accounting for expenses. This metric is crucial, and banks look out for the same when you apply for a personal loan.
You should always try to maintain this between the 40-50% range, as it is considered good. This will help you get your loan approved quickly.
The ten ideas mentioned above are crucial to getting a loan approval quickly, but it doesn’t mean you are sure to get a loan. Though you might meet all the personal loan eligibility criteria, it doesn’t translate to getting a loan. The sanctioning is at the lender’s discretion, and many factors come into play before a decision is made.
But if you follow the above strategies, your chances will improve, and you will be better placed to get your loan application approved in no time.