Before approving a personal loan application lenders need to verify a lot about the applicant, this includes their ability to repay the loan. To ensure this lender looks at several factors such as your CIBIL score, income, debt-to-income ratio and so on.
Personal loans are unsecured and thus it becomes important for the lender to check for all these for a sure short full repayment.
So, if you’re planning to take a personal loan, here are some quick tips to ensure your personal loan application approval.
Tips to Get Your Personal Loan Approved
- Check your Credit Score before you Apply
If you apply for a loan without knowing your CIBIL score, you may get rejected for a low score. So, the first thing you should do when planning to avail a personal loan is to check your credit report, so that you don’t get a dreadful astonishment when you apply for the loan.
You may think that you have a decent score since you have taken care of all your bills and payments. But, different components could also be hauling down your credit score. This can be a high credit utilization ratio, a loan for which you are a guarantor and even a mistake is possible in your credit report. So, it is important to check for your credit report and get a copy of it, to rectify the errors if any and to improve the score if it’s low. Doing this before you apply for a personal loan will surely get your personal loan approved.
- Choose Your Loan Amount Reasonably
The loan amount you apply for is another important factor on which your loan approval depends.
One must apply for a loan amount reasonably after analyzing their repayment capacity. Checking the loan repayment capability based on the applicant’s current income is the first thing that lenders do as soon as they receive the loan application. Hence, if you apply for a big loan amount that would be difficult for you to repay in the decided tenure, then there are high chances that your loan application will be rejected. To get your personal loan approved, it is important to apply for a reasonable loan amount, which you can repay easily in decided tenure.
- Meeting the Eligibility Criteria
Meeting the eligibility criteria is the most important thing to get qualified for a personal loan or personal loan online.
The personal loan eligibility criteria may vary from lender to lender but generally, it is decided on factors such as- applicant’s age, income, job stability and debt to income ratio. With most of the banks, the age group who can apply for a personal loan ranges from 22 to 60 years, and the minimum income required to get approved for a personal loan is ₹25,000. So, if want to apply for a personal loan do research well and apply with a lender with whom you are eligible to apply with.
- Do not Apply with Multiple Lenders:
People do apply with several lenders at the same time to maximize their chances of getting the loan. But, doing this reduces your potential to get approved for a loan that you have applied for. When you do so, lenders can feel that you are hungry & desperate for the loan. Lenders may also think that your loan application has been rejected with some lenders and hence you are applying with multiple lenders now. Moreover, too many loan applications without any single approvals can lead to a drop in your CIBIL score. Do research before you apply, and only apply with a bank where you have more chance of being approved.
- Debt to Income Ratio
Your debt to income is another important factor that decides your personal loan approval. To get approved for a personal loan you have to ensure that not more than 30% of your salary goes towards EMIs. Lenders have to check for the debts over you and how much you are paying for those debts monthly. If you are paying more than 30% of your income towards EMI for your existing loans, lenders consider it risky to give you the loan as you are already having so much financial burden on you. To get approved for a personal loan ensure that the EMIs for all your loans are not more than 30% of your monthly income.
Before you apply with one, make sure you’re going with a reputable lender, it’s always smart to shop around & compare for the offers and low rates. Don’t forget to check for your eligibility criteria, and to ensure your personal loan gets approved follow the above-mentioned tips.