Personal loans are unsecured loans that are used by borrowers to meet emergency fund requirements. You aren’t required to provide any collateral to avail a personal loan. This means higher interest rates when compared to other loans like home loans, car loans, etc.
The main reason why many opt for personal loans is that it has quicker disbursal rates and the loan process is hassle-free. Loans once approved by the bank are usually disbursed within two working days. Also, the interest is fixed for the entire tenure of the loan. Unlike home loans that have long tenures, personal loans are for a shorter duration, typically from one year to five years.
Personal loans are a boon when you’re in dire need of cash. However, how do you ensure that your loan application doesn’t get rejected? Here, you can find five valuable tips to make the loan application work in your favor.
- Get the Loan Amount Right
While applying for a small personal loan, you must first consider your monetary requirement. If your loan amount is too small, then you must try to arrange for it elsewhere. Financial experts state that all personal loan applications for small sums get rejected. This is because the lender assumes that you are so in need of cash, that you aren’t able to meet even small amounts. For such small requirements, try to maintain a personal contingency fund and replenish it later.
- Your Salary
This is a typical catch-22 situation. Banks don’t approve an easy personal loan if you have a salary or income that falls below the threshold determined by the bank. So, make sure that your salary or income is well over the threshold for your loan application to get approved. You can find this limit by checking out with the sales team of your bank or lender.
- Purpose
When you apply for a personal loan, you’re required to state the purpose. If the purpose isn’t worthy or isn’t legal, then your loan application gets rejected immediately. The primary objective of a personal loan is to meet emergency cash needs and not to fund your extravagant purchases. So, consider the reason for the loan. If it isn’t worthwhile, then it makes sense to drop it.
However, if you have sufficient salary or a steady stream of income, even if your purpose isn’t worthwhile, your guaranteed unsecured personal loan has a higher chance of getting approved. On the other hand, if your salary is low, then make sure your reason for the loan is valid.
- Influence of other loans
If you have already availed several other loans, then there is a higher chance of your quick unsecured personal loan application getting rejected. If the sum of all the EMIs you are currently paying is more than 50% of your net salary, then your loan has a higher probability of getting rejected. Your CIBIL score must be more than 750 for your loan to get approved.
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Impress your Lender with your Job Profile
Banks favor borrowers with a steady job. So, make sure to impress your lender with your employment history and bring forth the fact that you’re an asset to your organization.
Don’t try to gamble on your loan approval. Taking a chance on your loan application is sure to impact your credit history negatively. Try to fulfill all these criteria to be doubly sure of your chances of getting a fast personal loan sanctioned.