Applying for a loan can be a stressing event. While the whole idea of additional outflow of cash may give you jitters, getting approval for a personal loan can also give you stress. Now, before you get approved for a personal loan, you should know a few of the basics.
A personal loan is an unsecured loan which means that you don’t need to provide any collateral security while availing the loan. Because it is unsecured lenders such as Tata Capital treat personal loans as a separate category charging a higher rate of interest as compared to secured loans.
You may think availing personal loans is difficult. Actually, personal loans are relatively easier to avail with very minimal formalities and quick disbursal. Before you apply for a personal loan, there are some steps you need to take to ensure your application sails through.
By following the simple guide that follows you can apply for a personal loan with a lender such as Tata Capital and increase your chance of obtaining approval for the personal loan.
Do basic homework
You need to do basic homework before you apply for a personal loan. You must first decide whether you need a personal loan at all. If you need loans for small business instead, you will need to check out different lenders and their eligibility criteria.
Satisfy eligibility criteria
Most lenders put up the eligibility criteria for personal loans on their websites for borrowers like you detailing various limits. These could include the age limit, employment status, minimum income by way of salary or self-employment, minimum and maximum amount of personal loan that you can apply for, personal loan interest range and other criteria specified by lenders to make sure you are capable of repaying the personal loan. Remember, if you don’t satisfy all the conditions, the lender may reject your application.
Collect relevant information and documents
Often people jump into applying for personal loans without doing due diligence on the application process. To ensure your application receives prompt attention make sure that you read all the terms and conditions of the personal loan and its process. Study the application form thoroughly and provide all the information required. Collect all the documents you need to submit along with your application.
Obtain your credit score
Remember that lenders offer personal loans based on your current and future sources of income and past history of your other loans. They depend on a credit bureau to ascertain your creditworthiness. You should preempt this and secure your credit score to ensure it is on the higher side. The higher your credit score the better is your bargaining power with the lender for better terms on your personal loan including a lower rate of interest. If your credit score is low take corrective action to improve it before you apply for a personal loan.
Calculate your cost of availing a personal loan
When you are examining your loan requirement it is good to consider the cost of your loan. You can use the personal loan EMI calculator to iterate the EMI for different values of the loan amount, tenure and interest rate. This will help you to decide how much you can afford to pay every month. If your credit score is high and other credentials are exemplary you will be able to obtain approval for your loan quite easily and also obtain more favorable terms.
Furnish accurate details
Remember you and the lender must exhibit mutual trust. You must furnish accurate information especially the information that can pass scrutiny. If not, the lender can seek additional information and necessary proof which may delay the process of loan approval and raise suspicion about your credentials.
Apply only to one lender
Many times, you feel that you want to take a shot in the dark and apply to different lenders. In today’s age of the Internet and instant data sharing this can be counter-productive and the lenders may not approve your application. The best course of action would be to evaluate all lenders and choose one and apply for a personal loan with that lender. You stand a better chance of approval.
Apply online for faster approval
It is quite cumbersome to visit a branch several times to submit your application. Lenders today offer online approval process where they will approve your loan based on the information furnished by you in your application. Once you are comfortable with the approval you can move forward and submit the hard copies to consummate the loan process.
As can be seen from the above, to apply for a personal loan you have to prepare well and be clear as to the loan amount you want. If you furnish the relevant information accurately and transparently you are well on your way to obtain approval for the personal loan.