Personal loans are a great way to meet your urgent financial needs. Whether it’s a medical emergency, financing your child’s education or planning a wedding, personal loans can help you out. However, getting a personal loan could be quite a hassle, especially if you’re taking it for the first time. So, we jotted down some quick tips to help you better navigate this situation.
Credit Score Matters
Your credit score or CIBIL score is the measure of your creditworthiness. As personal loans are unsecured loans that don’t require collateral, lenders pay close attention to your credit score. Having a decent credit score is an advantage in getting easy personal loans and approval.
If you have a good credit score, your profile is viewed as a low-risk profile. This means you’re less likely to default on loan repayment. This not only gets your application approved quickly but also ensures better interest rates and overall lower processing fees. Make sure all your previous loan or credit card dues are paid on time to improve your credit profile.
Don’t Forget Professional Credentials
Are you making the most of your employment credentials when it comes to a personal loan application? The better you earn, the easier you’ll be able to repay the loan. So, if you have a solid professional background, your chances of getting a competitive interest rate increase by many folds.
Additionally, working for a well-known company is seen as a sign of career stability. So, don’t forget to use the glowing reputation of your company when filling out your loan application.
Know Your Limits
Many loan applications get rejected because the borrower applies for a higher amount than they can repay. Make sure you consider all your variable and fixed expenses when assessing your loan repayment capacity. These include your living expenses, insurance costs, travel expenses, and miscellaneous spending.
Also, don’t forget your current dues and the possibility of any increased expenditure in the near future. It’s always a good idea to apply only for an easily manageable amount that you’ll be able to pay down quickly.
Keep a Good Bank Balance
While this sounds quite obvious, you’ll be surprised how many people aren’t able to keep a good average monthly balance. Your bank calculates your average monthly balance by dividing the daily closing balance by the number of days in a month. An excellent average balance shows the banks and NBFCs that you won’t have much trouble paying back their loan.
Another perk of maintaining a good balance is that banks offer you instant/pre-approved personal loans that are pretty seamless and hassle-free. These loans are ready for disbursement and usually get credited to your account within a few hours. Don’t forget to read the terms and know the fees before using these loans.
In most cases, a personal loan is an urgent requirement, so you are prone to making impulsive decisions in times of crisis. But we strongly advise that you pace yourself and read the tips given above to make a wise decision.