A personal loan is a great way to overcome your financial limitations and can be used to handle a medical emergency, pursuing higher education, etc. A personal loan is offered without any security or collateral, and it comes without any end-use obligation.
However, due to its unsecured nature, the lenders perform an in-depth investigation about the lender’s profile and financial history to ensure a low credit risk. Hence, one should be aware of the numerous ways to increase their odds while obtaining the loan quickly and conveniently. Read on to know about ways to improve your chances of getting a personal loan.
Ways to Increase Chances of Personal Loan Approval:
● Maintain a healthy credit score
An excellent CIBIL score of 750 or above increases your chances to get a personal loan as it demonstrates. Your disciplined behavior in handling debt and repayment activity. A credit score is a 3-digit number assign to an individual by concern agencies based on one’s financial history that consists of paying credit card bills and loan EMIs in full and on time.
As a result, having a high credit score also provides the borrower an upper hand to get a personal loan at a low-interest rate with additional benefits. In addition, maintaining a healthy credit utilization limit (CUR) and checking your credit report regularly for corrections also has a positive impact on an individual’s CIBIL score.
Also, read further regarding “7 Learning From Financial Mistakes For A Secure Future“.
● Keep a healthy job profile
In addition to a high credit score, the individual should also possess a steady source of income. Whether one is working as a salaried professional or running a small/large scale business. Such a credible source of income improves the odds of obtaining a personal loan without any hassle.
While the borrower should avoid frequent job-hopping. And maintain a stable employment profile to ensure the loan amount’s repayment to the lenders. They should also earn a sufficient income to meet the mandatory monthly finances and deposit the EMI amount regularly.
● Choose a more extended repayment period
A personal loan is repaid with the accrued interest rate through equated monthly installments (EMIs) over a fixed/flexible tenure, depending on the lender’s guidelines.
Upon computing the monthly installments through a personal loan EMI calculator. The financial institutions aim to ensure that the borrower’s monthly expenditures are not more than 50% of their net monthly income. This is to avoid a high credit risk factor.
As a result, if the monthly obligations exceed the limit. One could opt for a longer repayment tenure to decrease the EMI amount. However, it would increase the overall loan amount due to the levied interest rate over a more extended period.
● Apply with a guarantor or co-applicant
Another key parameter to tilt the odds in your favor for getting a personal loan is adding a co-applicant or a guarantor. With a stable income and job profile to your loan application. Such a method is also helpful in cases where the borrower has a low credit score or an unstable source of income.
It also helps reduce the credit risk. Because the guarantor is equally responsible for repaying the loan amount along with the primary applicant. An added vital advantage of adding a co-applicant. One could negotiate with the lender for a higher loan amount or a low-interest rate. Due to the fulfillment of eligibility conditions.
● Make the most of your existing associations
A great way to boost your chances of obtaining a personal loan from a lender is to leverage. Your existing customer relationship with a financial institution.
While it is advisable to compare loan parameters of different lenders before making a final decision. One should approach a known and credible lender, ensuring fast loan processing and quick disbursement. In addition, you can also go with a financial institution with whom you are associated for availing a personal loan at special offers and extra benefits.
● Avoid multiple loan applications
Last but not least, the borrower should avoid submitting loan applications to various lenders. Simultaneously, it creates a negative image in the mind of the lender, which could result in loan rejection and hampers their chances of getting a loan in the future. Hence, one should avoid rushing while submitting the loan application. And take one step at a time for a smooth process.