When a budgetary problem strikes unexpectedly, we resort to personal loans for help. It’s the greatest alternative when you are in a pinch for cash. However, there are a few factors to consider before applying for this loan. It can make the application process difficult if these factors are not known ahead of time. Therefore, it becomes vital to eliminate any potential delays by employing the following strategies.
- Apply when it is necessary
You should apply for a personal loan after a thorough assessment of your needs and existing debt obligations. Many people simply consider the loan’s short-term benefits, forgetting that they would have to pay regular EMIs until the loan is paid off. As a result, taking out a loan for something that isn’t necessary will add to your financial load. Lenders are also hesitant to lend to profiles where there is no clear objective or if the desired amount is out of budget for the borrower.
- Research is the Key
Personal loans are available from a variety of lenders. They never fail to lure borrowers with their tempting loan offerings in order to keep ahead of the competition. But, before you fall victim to a con or a fake lending institution, be cautious. Read the lender’s terms and conditions before signing the loan application.
You must also compare the interest rates. Also, compare the various lending institutions’ product features. Choose a lender whose product is ideal for your requirements.
- Check Eligibility
Make sure you go through the different lenders’ eligibility criteria before placing them on your preferred list. Eligibility criteria play a major role in personal loan approval. Meeting the minimum eligibility requirements guarantees loan approval while maintaining a strong profile ensures a low-interest loan. Some of the most common qualifying conditions are detailed below.
- You must be a citizen of India.
- At the time of submitting a loan request, you must be at least 21 years old.
- The maximum age must not exceed 58 years at the time of applying for a loan.
- Whether you are employed or self-employed, you must make a minimum monthly income of Rs 15,000 to be approved for this loan.
- Use Personal Loan EMI Calculator
Personal loan EMI calculator is a free tool that helps you in determining the monthly obligations even before you are approved for the loan. It allows you to figure out the maximum loan amount that you can comfortably repay over time.
Read the instructions if you are unfamiliar with how to use an EMI calculator.
- Step 1:
Go to any lender’s website and click on the personal loan section. There, you will find the personal loan EMI calculator.
- Step 2:
On the very first slider, you need to enter the loan amount. Make sure the amount you are entering does not exceed the lender’s maximum sanction amount.
- Step 3:
In the next slider, enter the interest rate. Analyse your eligibility criteria and the lender’s minimum and maximum interest rate range. It will give you a rough estimate of how much you will be charged. Use various interest rate combinations to get the most out of the calculator.
- Step 4:
In the last slider, you need to input the repayment tenure. The maximum term that you can enter on the calculator is 60 months. It is suggested that you experiment with different loan term combinations. This is because the EMI and total interest payable alter over time.
- Step 5:
The last step is to click on the submit button. Following submission, you will see not just the EMI but also a detailed amortisation chart. The chart will show you how much you will be paying toward the principal and how much you will be spending on interest payments.
- Maintain your Credibility
Getting a personal loan with a poor credit track record is difficult. Many people believe that they will be approved for a loan if they have a stable income and employment. However, this is not true. The lender also assesses your credit report. They will carefully study your previous debt history and see if you have paid your previous EMIs on time. Furthermore, they will also check for any previous loan defaults.
As a result, you should try to clear any previous loan defaults first. Reduce your debt load if you are burdened by many loans. This is because the lender also considers debt-to-income percentage. They normally avoid lending to those who spend more than half of their income on debt repayment.
- Mention Additional Source of Income, if Any
Additional sources of income are also taken into account when determining your personal loan eligibility. If you have a spare apartment from where you are receiving monthly rent, mention that on your application. In the same way, any regular income from a part-time business must be disclosed on the loan application.
If you follow the above tips, the time it takes to process a personal loan can be reduced by half. In layman’s words, the above suggestions assist you in obtaining immediate access to funds with less effort.