There comes a time in almost everyone’s life when the need for having access to more money than they have arises. Most people do consider taking a loan, but that’s not to say that the idea can be intimidating. First off, you might not have the necessary collateral to submit against the loan you’re taking. Second, the interest rates may be too high for your current financial situation.
Well thank God for small mercies, because that’s where a personal loan comes in handy. Its unsecured, charges you a fair interest rate based on your credit score and is completely flexible, meaning you can use the money for just about anything!
That being said, applying for any sort of loan can be a cumbersome process, which can ultimately defeat the purpose especially if you’re in need of money urgently. The next time you plan to lodge a loan application, keep these helpful tips to keep in mind to speed up the approval process.
- Make A Checklist Of What Documents You Need
Before you set out to do anything else, make sure you have all the documents that will prove how reliable you are. Most banks ask for the following:
- Proof of identification
- Address verification
- Proof of income
- Bank statements
- Employment details
- Your overall credit score
This list, of course, varies from bank to bank, so be sure to check with your loan provider beforehand.
- Have A Good Credit Score
Having a good credit score is super important if you’re trying to apply for a loan. Why? Because banks use your CIBIL score to assess whether you should have access to the best interest rates or the not-so-good ones, or even whether they should lend you any money at all.
Your CIBIL score is generated in the range of 300 to 900. The closer you are to 900, the greater the confidence your loan lender/bank will have on your ability to repay the loan. Hence, the better are your chances of your loan application being approved quickly!
- Calculate How Much Money You Really Need
You’re looking to apply for a personal loan to hold your hand through your current financial position, not to burden you with long-term debt. Besides, banks will also look into your income details and if it seems insufficient to satisfy the repayment requirements, you’re not going to be approved.
This is why you need to make sure you know exactly how much you need to borrow and whether your current income situation can take on that extra liability.
- Stay Away From Multiple Loan Applications
When you apply for too much credit, it will only increase your debt amount and will, in turn, make it look like you’ve bitten off more than you can chew. Plus, if you have multiple rejected applications, it can end up affecting your credit score and will further interfere with your loan approval process.
So keep in mind that your bank will look into your credit history to check your existing debt status and be sure to apply for loans within reason.
- Bring In Some Healthy Diversity
Always maintain a decent balance between secured and unsecured loans. This is because lenders are more at ease with consumers who display a history of on-time payments across different types of credit. This demonstrates responsible credit management and also helps the lender in question understand your credit risk.
- Hold A Sturdy Savings Account
A strong savings account not only shows you’re financially responsible and consistent with your saving money but also demonstrates a good steady flow of income. To your loan lender, this says you’re perfectly capable of managing your loan repayments, which means less risk for the person or the bank lending you the money!
- Ask Questions And Negotiate
While loans may get pre-approved upfront, the nitty-gritties may not be known until a few weeks. Keep in mind that loan lenders have to follow a certain protocol when it comes to approving a loan, so being in a hurry and stressing out will not serve your purpose. Instead, make sure you ask them what the procedure is so you have an idea as to when you can expect to hear back from them.
- Hold A Steady Job
Make sure you have a stable job or have been serving your current organization for at least 6 months. This is especially important if you’re considering taking a personal loan, because you have to remember, you’re not being asked to put up any collateral. For this reason, banks and money lenders usually feel the safest when dealing with people who have an experience of 2 years and above because that way, they know that there is a steady flow of income to assist in repaying the loan.
- Online Lenders? Do Your Research!
Choosing to go with online personal loan-lending services, is smart because it saves you all that time and energy, running back and forth between brick-and-mortar banks. Plus, online lenders also have much lower operating costs and are hence, able to offer you lower interest rate benefits.
Still, be wary of advance fee loan scams. Make sure you do adequate groundwork before you approach an online loan lender; it must be a state-licensed financial institution with no shady past or pending financial lawsuits.
Taking a personal loan is an easy way to make huge things happen – from funding a wedding to bailing you out during a medical emergency. Pair these tips along with adequate diligence and research and you’ll soon find how easy it is to get your loan approved!
To know more regarding the personal loans click here.