Five Points to Consider Before Applying for Personal Loan
Personal loans get easily disbursed in less than 72 hours, however when an application for a personal loan is made the bank or the financial institution exercises a high degree of care and takes various precautions while granting the loan.
SBI logo. (Photo: Reuters)
Personal Loans come to rescue when life brings unexpected moments that need a modest chunk of finance. A medical condition/accident, a near and dear one in need, a long-cherished vacation or a family wedding… there could be n number of possibilities that require you to apply for personal loan. Personal loans get easily disbursed in less than 72 hours, however, when an application for a personal loan is made the bank or the financial institution exercises a high degree of care and takes various precautions while granting the loan. There is no surety whether your personal loan application may be granted or rejected; in case the application is rejected it negatively impacts your credit score.
Let’s take a look at the following 5 Points that ensure your Personal Loan Application is not rejected:
Your Credit Score could be low even if you have not defaulted on EMIs in the recent past. The Credit Score considers all transactions in the last five years. Therefore, it is better to check your credit score yourself before applying for a personal loan. Another reason for a low credit score is applying for multiple loans in a short span of time, which shows the desperation to get finances and thus increases the chances of your rejection. Most of the banks consider a CIBIL Score of 750+ as a good score.
Every financial institution expects that at the time of making the loan application you must earn a minimum amount of monthly income i.e. preferably an amount that enables you to pay the monthly EMIs on time. The minimum amount specified for every institution is different and if you fail to fulfill this eligibility criteria, the loan application would be rejected. Thus, it’s best to check whether you fulfil the minimum amount of monthly income criteria or not, before making an application for a loan.
Financial institutions pay attention to your employment history and check how stable you have been while considering your personal loan application. They have criteria like the borrower must hold a stable job for at least a certain specified number of years. If applying for personal loans whether online or through a branch, you're required to submit your income proof documents too.
Financial institutions while granting a loan thoroughly check the details you provide in your application. If they find that any of the details or information provided by you is incorrect or discrepant the loan application might get rejected so in order to prevent the rejection of the application you should carefully check the details you provide.
Banks prefer to approve personal loans of those applicants who’ve had a tryst with financial institutions before especially if you have a secured loan like Home Loan, the chances of your personal loan application getting approved are higher. On the other hand, if you have more unsecured loans then the chances of rejection are high. The point is to maintain a healthy balance of secured loans, unsecured loans. Secondly, keeping too many credit cards is not recommended, on the other hand, it is better to use Credit Card as and when you can and make the payments on time.
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