A Personal Loan can be an excellent source of extra cash in cases of emergency. At most significant events in life, it is difficult to stick to a budget and hence the option of getting an instant Personal Loan is very beneficial. Although the process of getting a Personal Loan is not a tedious one, it is often better to know of the requirements and the steps that you would have to carry out before applying for the loan. This would help you understand the application process as well as the process of underwriting. Thus, avoiding any delay in getting the money.
Here is your Simplified Guide to Applying for a Personal Loan
Identify why you need the Funds
It is essential that you know precisely why you need the funds along with how much you would need. It is necessary to do this before you apply for the loan as you do not want to be paying interest on the excess that you may not have needed. On the other hand, if you under-assess the amount you need you could end up having to make arrangements for more money at the last moment. You should also ensure that the reason for which you need the funds is not something frivolous as this may cause regrets at a later stage.
Collect all the Documents that are Needed
As you can now Apply for a Personal Loan Online most of the paperwork required is available online. You can check the list on the bank’s website, most common requirements are PAN card, Adhaar/Passport/utility bills, your bank account statement for the past 6 months, and your income documents, such as payslips for the past 3 months or the Income Tax Returns for the past two or 3 years.
Compare Offers from Multiple Lenders
To get the best deal, you need to look at all the possibilities and compare interest rates and other charges that you may have to pay. However, you need to understand that applying to many lenders would result in a negative impact on your credit score. It is best to do your research before applying for the loan. You also need to read of the terms and conditions that are associated with the credit such as pre-closure charges.
Apply for the Loan
Once you have the information that you need about the Personal Loan you can now apply for the one that is best suited to you. Once you have checked your Personal Loan eligibility, keep your documents ready so that you would not have to worry about any delay in the approval of your loan.
How to Apply for a Personal Loan
Applying Online/Offline
The quickest way to get your Personal Loan disbursed is by applying online. All you have to do is to fill out a form with necessary information and complete the application online. After that everything is done by the staff at the institute. Also, there are also institutes that would send someone to your home to pick up the required documents. If you apply offline, you would be provided with a loan expert who would explain the entire loan process along with the interest rates and any other charges that you would have to pay. This agent would also be your point of contact till the loan is disbursed.
Applying at your Bank
Choosing to apply for a Personal Loan at your bank increases the chances of your loan application getting accepted. You would not have to provide them with too many documents as they have most of your personal information as well as your bank statements. As you would already have a relationship with the bank the processing time of the loan is faster, and you would also be able to get better terms with your bank.
Also Read: 10 Tips for a Successful Personal Loan Application
What Would your Lender Look into?
The process of underwriting is not always complicated. Your lender would check your credit score and your eligibility for the loan. Most lenders would check your monthly income to figure out your ability. Your EMI (Equated Monthly Instalment) cannot be more than 50% of your salary, and thus the loan amount would be calculated accordingly. For example, if you earn 100000 per month, then your EMI cannot be more than 50,000 per month. Your credit score also plays a significant role as if your credit score is not acceptable there will be chances of your loan being rejected.
Now that you know everything you need about applying for a Personal Loan you can go ahead and find the best loan for you. After your loan is approved and you receive the money, you should make sure that you pay your installments on time or it would negatively impact your credit score.
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