Personal loans are form of unsecured loans I.e. they are not secured against borrower’s assets. They do not require any collateral and are offered with minimal documentation. Interest rates on personal loans vary from financial institutions to financial institutions; but generally, these range between 9% to 25% per - annum. This generally depends upon the amount of loan, tenure of the loan, credit score and income of the borrower. Below are the list of points compiles for you to easy approval of your personal loan.
Meet the eligibility criteria
It is the first and foremost rule that goes without saying for applying for a personal loan. You should always check for the eligibility criteria of the financial institution you are applying loan from. Generally, borrowers apply for the loan amount they are not eligible for and hence let to rejection of their loan. Hence as a rule of hand before applying for a personal loan just check the eligibility criteria of that financial institution and apply only if you meet every eligibility criterion. Ensure you meet eligibility criteria in every aspect such as documents, income certificates, credit reports, tax returns, etc.
Have a good credit score:
Credit score plays a major role in financial institutions deciding the amount to be lent and interest rate to be charged for the money lent. Also, it also helps them decide whether to approve/reject your loan application. Credit score is generally calculated on various criteria like 35% payment history, 30% amount owed, 15% length of history, 10% new credit, 10% types of credit used. The range for the credit score lies between 350 - 900. A good credit score is anything above 700 and there are high chances of rejection of your personal loan application if the score is below 550. Hence it is always suggested to not apply for the personal loan directly, if you have a low credit score, but take time to improve your credit score and and then apply for personal loan.
Don’t apply for new loan while repaying a previous one.
As a rule do not apply for another loan if you already have any loan in your name. Financial institutions generally reject your personal loan application if there is already a loan against your name. This is because financial institutions see this as another burden your financial condition and your inability to repay the second loan. They generally see how feasible it is for you to pay the loan to mitigate their own risk of defaulting the loan.
Be reasonable when deciding your loan amount.
Before providing you the loan financial companies tend to check your ability to repay the loan, they refer to your current income to ascertain your repayment ability. Hence one should not apply outrageously high loan amount as financial institutions would reject your loan application. You should always check with the institution if you would be able to pay the borrowed amount in the stipulated time with the interest rate applicable and then only apply for that amount.
Don’t Send Out Multiple Loan Applications:
Generally, applicants, tend to apply for a personal loan to multiple financial institutions as they think it would improve their chances of approval of the loan. But it is completely opposite, financial companies tend to think that the chances of this applicant taking loan from that institution is quite less. Hence do not apply for multiple financial institutions and just stick to one.
Conclusion
In conclusion to the above points your loan application should be self-explanatory and should have all the check boxes ticked as required by these financial institutions. Following these steps would increase your chances of personal loan approval manifold times. Apply to Financial Institutions patiently, and, look for a deal with a low-interest rate.
