A personal loan can help you in meeting any kind of financial obligation. Whether you want to go for debt consolidation or make a big ticket purchase, finance your start-up or pay for your education, a personal loan offers you instant cash to meet all these financial needs. Many lenders offer you instant loanjust on the basis of your monthly salary. They do not seek collateral or guarantor for a personal loan. In addition to this, personal loans through a loan app come with many attractive features like affordable rate of interest, flexible loan tenure, simple documentation and easy eligbility. This has resulted in a huge surge in the demand for personal loans.
But before you apply for an instant loan through a loan app, you must check the terms and conditions on your loan offer. With a few smart financing tips you can avail a personal loan on your favourable loan terms.
Read on to discover the factors that can affect your personal loan application.
Factors to be Considered While Applying for a Personal Loan
A personal loan can be used for various purposes and it can be repaid inequal monthly instalments (EMI). Today, these instant loanscan be availed in a click of a few buttons. These loans are more affordable than a credit card, the disbursement is quicker and the documentation is minimal. But before availing a loan, you must consider the factors that can affect your loan application.
Read on to check out the factors that can affect your personal loan application:
1. A high credit rating
A strong credit score is a first and most crucial factor when applying for a personal loan. Your credit history is represented by your credit score, which every bank looks at before granting a customer a loan. Simply put, your creditworthiness is indicated by your credit score.
A high score can help you secure a personal loan with higher loan amount and lower interest rate. Therefore, strive to maintain a high credit score as all lenders consider your credit score while checking your loan application form.
2. Eligibility requirements
The requirements for obtaining a personal loan can differ from bank to bank. Therefore, you can either contact your bank or download a loan app to fully understand the eligibility criteria of the lender. Typically, your age must be ranging between 21 and 60 years. However, this can vary from bank to bank.
Additionally, the bank checks your income, which is the second most important consideration when applying for loans (EMIs).The lender will also check your debt to income ratio, so make sure to manage your debts well and keep your debt to income ratio below 50%.
3. Additional fees associated with the loan
A personal loan entails expenses beyond the EMI and payments due each month. A limited amount is levied as processing costs in accordance with your bank’s policies. In addition, you can have to pay additional fees like late fees, part-fee fees, foreclosure fees, etc., which are typically assessed when you need to keep up a good repayment history with your bank.
Therefore, you must make sure that you are fully aware of these additional fees before signing the contract. If you meet the eligibility criteria of the lender, then you can negotiate with the lender to waive off certain fees. Negotiate with different lenders and go for the one that offers you the best features.
4. Understand the repayment schedule
No matter how urgent the circumstances, financial experts suggest that you must create a proper payback plan before signing the loan paperwork. With the help of this strategy, you can repay your personal loan without experiencing any difficulties.
You must know the exact details regarding the interest rate, EMI, payback length, your EMI date, etc. This information will help you determine whether it suits your financial situation. A loan app comes with an inbuilt EMI calculator. It allows you to choose the loan amount, term, and interest rate to suit your needs.
5. Apply only for the loan amount that you need
Your lending institute may make several tempting loan offers if you are approved for the loan. Make sure to resist these offers and offer for an amount that you absolutely need.Though it is very easy to get a higher loan amount, availing extra funds will only increase your financial liability.
You must be very cautious while applying for a personal loan. Make sure to create an approximate budget, and apply for the loan amount that will help you meet your immediate financial needs. You can always apply for top-ups if you need more funds, but keeping your borrowings to a minimum is always a good idea.
Personal loans are often seen as one of the easiest ways to get the money in times of financial need. However, keeping the aforementioned considerations in mind will help you to get a loan without increasing your financial burden.
Online rapid personal loan apps are preferred over more conventional loan application processes. Instant approval and quick disbursals make these digital platforms more attractive,