Personal Loans are a way to secure instant funds for various purposes. They are accessible in times of uncertainty and can be used for almost anything. Whether covering medical expenses, paying college fees or renovating a house, a Personal Loan comes to the rescue for various tasks. The freedom to use the funds as needed empowers individuals to seize opportunities and tackle life’s twists and turns. Personal Loans can also build a healthy credit score if you borrow responsibly and repay on time.
You must know the tips and tricks to get a Personal Loan approved. From maintaining a healthy credit score to avoiding multiple loan applications, this blog will cover all the points to help you obtain a Personal Loan with banks.
Features of a Personal Loan
A Personal Loan is the amount of money borrowed that can be used for various objectives, including debt consolidation, house renovations, or self-investment. You will then return the loan amount plus interest in regular monthly instalments for the duration of the loan. Best Personal Loans in India can be obtained through banks or online lending institutions.
The following are the two main features of a Personal Loan:
- Flexible end usage: Lending institutions do not inquire in detail about the loan’s objective. Thus, the money can be used for any lawful cause, such as a medical emergency or vacation.
- No collateral required: The loan is unsecured. Thus, no collateral is necessary when applying.
Tips to get approved for a Personal Loan in India
1. Maintain a healthy credit score
A credit score is one of the primary things lending institutions consider when approving a personal loan. A credit of 750 and higher is considered ideal. To maintain a healthy credit score, individuals must pay bills on time, apply for a credit card when necessary, request a higher credit limit, minimise the credit utilisation ratio, etc. A high credit score allows the applicants to negotiate a lower interest rate on the best Personal Loan in India.
2. Reduce the debt-to-income ratio
Your debt-to-income ratio is the percentage of your income that goes toward paying debts. Lending institutions use this ratio to determine your creditworthiness and ability to repay your debts. A debt-to-income ratio ranging from 20% to 35% is considered ideal for quick loan approval. A longer loan term can reduce your monthly payments, lowering your debt-to-income ratio. You can also combine your debts into a single payment with a debt consolidation loan.
3. Apply for a shorter loan term
If it is financially viable, consider a loan with a shorter repayment period to acquire it quickly. When you repay a loan in a shorter period, lending institutions consider you a less risky borrower since it decreases the possibility of payment failures or significant changes in your financial situation. It eventually lowers the risk for lending institutions as well. However, you should analyse your monthly budget before deciding on a short-term loan.
4. Avoid multiple credit queries
While there is no limit to the number of hard credit inquiries you can make, multiple inquiries in a short time can negatively impact your credit score. Lending institutions may view multiple inquiries as a sign of desperation or a higher risk, which can lead to credit rejection. To minimise the negative impact of multiple inquiries, you can limit the number of hard inquiries you make to two or three per year. You can also avoid applying for multiple credits at once and only when needed.
5. Apply with a co-applicant
If you want quick approval for a cash loan, the best way is to apply. When applying for a loan with a co-applicant, lending institutions consider both applicants’ financial situations and credit histories. It can increase the chances of loan approval and may lead to more favourable loan terms. Some benefits of having a co-applicant include Increased eligibility, Attractive interest rates, Combined tax benefits, Deductions on principal and interest repaid, and Access to a higher loan amount.
Conclusion
Individuals must follow the tips above for quick approval for Personal Loan in India. The application process is easy and requires minimal paperwork. As the process is online, applicants can apply for a Personal Loan anytime and from anywhere. Applicants can apply for amounts up to Rs 50 lakhs, with interest rates starting at just 10.80%. To get loans disbursed instantly, ensure you submit the correct documents and enter the correct information while filling out the application.