New Delhi: Financial institutions such as banks provide loans to customers for various personal and business purposes. A personal loan is a very useful tool for clients to cushion financial emergencies like medical care or achieve goals and dreams. They are in a wide range like car loan, education loan, marriage etc.
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Since personal loans are unsecured, borrowers find it difficult to obtain these loans due to the strict process followed by banks. The CIBIL score is very important for obtaining personal loans. However, you can increase your probability by following certain steps.
Here are some ways through which you can increase the likelihood of getting loans from banks:-
1. Understand the lender’s eligibility criteria
Before choosing a lender, carefully review the defined eligibility criteria. This includes age, income level, employment, etc. Use an online eligibility calculator to ensure you can easily qualify for the loan and avoid rejection.
2. Take what you can afford
You may have a reduced chance of getting a personal loan if you apply for a larger loan than you can afford to repay. To determine an affordable loan amount that you can easily repay, consider all of your sources of income and financial commitments. This will help reduce the likelihood of default and greatly simplify loan repayment.
3. Maintain a good credit score
Your credit score is a measure of your creditworthiness and one of the main factors affecting the approval of a personal loan. A credit score of 750 and above can increase your chances of getting loan approval. That said, if you have a low credit score, it’s best to wait and improve your score by paying your EMI and credit card bills on time and maintaining a low credit utilization rate.
4. Don’t apply to multiple lenders at the same time
In the event of a financial emergency, you might consider approaching several lenders simultaneously in hopes of obtaining a loan. However, you should avoid this. Not only might lenders consider this to be credit-dependent behavior, but too many inquiries can hurt your credit score as well. This is because every loan application results in a thorough credit report investigation, which can lower your credit score over time.
5. Add a co-borrower
Most lenders will allow you to apply for a personal loan with your parent or spouse as a co-applicant. This is especially useful if you are unable to meet the lender’s income criteria or if your credit score is not up to scratch. If they have a high credit score and monthly income, adding them as co-applicants will improve your chances of getting a personal loan at attractive interest rates.
6. Mention all your sources of income
Lenders want to know if you can make timely payments when applying for a loan. So be sure to include any additional income you may have, including any rent, dividends, interest or other sources. Not only will this increase your chances of getting a loan approved, but you may also qualify for a higher loan amount.
7. Choose a longer repayment term
A longer loan term will split your EMIs over time and allow you to make timely repayments without the risk of default. This way, you can reduce your financial burden and increase your chances of getting approved for a loan.
8. Take a few months gap between loan applications
The optimal time between loan applications is at least six months, as frequent loan applications can negatively impact your credit score. Wait a while to raise your credit score if you don’t have any urgent requests; you will have a better chance of being accepted.
9. Do not give false information
For a simple and hassle-free application process, be sure to provide accurate information when completing your personal loan application. As incorrect information can affect your loan acceptance, double check for any inconsistencies or spelling mistakes. Also, have the necessary documents at hand before applying. Summary To ensure a smooth and hassle-free loan approval process, keep these suggestions in mind.
(With ANI entries)