A personal loan can take care of the varied financial needs of customers – from small or big-ticket purchases to encountering an emergency and financing an event. With easy eligibility criteria, salaried or self-employed individuals can get quick funds using a personal loan. The key factors that impact interest rates on these salaried or self-employed loans are income and CIBIL score.
Since personal loans are collateral-free loans, the application process is simple. It is much faster when customers complete the application process using the best loan app in India. Personal loan growth has accelerated to 20.4% (year-over-year) in January 2023 from 12.8% a year ago driven by various factors, including online and easy processing.
10 Tips to Get Easy Approval for a Personal Loan
Here are the strategies to increase the odds of getting approved for a personal loan with the most favorable terms and interest rates:
Show Additional Source of Income
As a lender, we need to verify the borrower’s financial resources to check if they can repay the loan amount within the stipulated time frame. Customers who are able to show an additional income source like dividends on shares, rent, or others can boost their chances of getting approved for a personal loan. The loan amount can go as high as Rs. 25 lakhs to meet financial requirements. Mentioning an additional earning source works in the borrower’s favor for easy personal loan approval.
Consider Cosigner for a Joint Loan
Individuals can apply for a joint loan with a cosigner with a sound credit profile. A cosigner is a co-applicant for a loan. Applicant’s parents, spouse, or other trustworthy individuals can be a cosigner for a personal loan. It will boost the chances of getting approved for a personal loan at favorable terms.
Reduce debt-to-income ratio
Customers should reduce their debt-to-income ratio for easy personal loan approval. It should be in the range of 20% – 30% to boost personal loan eligibility and chances of loan approval. Debt-to-income ratio is determined as – the gross monthly debt divided by the gross monthly income. Suppose the customer has a car loan with an EMI of Rs.12,000. The monthly payment is Rs.24,000. Here, the debt-to-income ratio is 50%. It shows that the applicant’s liabilities are higher than the monthly income.
Review Credit Report
Credit reports may have errors. For example, there can be an open loan account in the report already closed by the borrower. Such stances reduce the credit score. Therefore, customers should check their credit reports before applying for any credit product. If any error is found, apply for the correction with the credit bureau.
Have a Long Repayment History
Checking the repayment history is a tool to know a customer’s financial habits. A long and spotless repayment history indicates that the customer has paid their debts in a timely manner. As a lender, we can trust those loan applicants and approve their personal loan applications.
Avoid Making Multiple Loan Applications
Applying for multiple personal loans simultaneously can hurt the credit score as it is considered a credit-hungry attitude. It is one of the primary factors for loan rejection
Prefer a Long-Term Tenure
A personal loan can be approved for a repayment tenure between 12-60 months. Customers can choose the most suitable and long tenure for easy EMIs. A longer repayment tenure spreads the loan repayment in smaller amounts that reduce the impact on the debt-to-income ratio.
Borrow as per Requirement Only
As a responsible borrower, apply for a loan amount that is really required and can be repaid quickly. Lending institutions can approve a personal loan per the applicant’s credit profile and repayment capacity. To avoid loan rejection, customers should check their eligibility and apply for a loan amount accordingly.
Pay Down Revolving Balances
Using credit cards unnecessarily can have a negative impact on credit scores. It may result in revolving credit card balances. Ensure paying bills on time to avoid revolving balances.
Choose Lender with Easy Eligibility Criteria
As a leading lending institution, our customers can get a personal loan against easy eligibility criteria. Easy-to-meet eligibility criteria increase the chances of salaried/self-employed loan approval.
Thus, customers looking for instant funds can look at these strategies to secure a personal loan seamlessly. Customers can apply online for a personal loan quickly using our mobile application at affordable interest rates.