Life is full of uncertainties throwing surprises at you when you least expect them. Your savings might not always be enough to bail you out. Personal Loan comes to your rescue whenever there is an emergency situation- be it medical or any undeclared expense. It is an easily available, unsecured loan bearing higher rate of interest than other types of loans.
However, it is not easy to get the approval for a personal loan. In order to increase the chances of getting your loan application approved, you need to follow these important tips:-
- Check the loan eligibility before applying:
It is important to check whether you meet the personal loan eligibility criteria of the lender you wish to borrow from. Most lenders require applicants to be in a particular age group, preferably between 21 and 65 years. Also, you must annually earn a minimum amount that is specified by the lender. Additionally, you should not have any outstanding defaults on loans or on any of your credit cards. Generally, lån med svag kreditvärdighet do not find appeal with a lot of borrowers, and so, it becomes imperative that one maintain a good credit.
- Check your credit history:
If you are not aware of your credit score while applying for a personal loan, your application may get rejected. The banks will entertain your loan application only if you have a healthy credit score. A good credit score not only increases your chances of loan approval but also helps you land an attractive interest rate.
- Repay all your existing loans/debts:
Before applying for a personal loan make sure that all your existing loans are paid off. If you are already debt-ridden with previous loans, the bank has the right to reject your loan application considering your inability to pay back the loan.
- Avoid multiple applications:
Did you know most lenders keep a check on how many times you submit applications for Personal Loans or other financial products? So, it is not prudent to apply for loans in several banks simultaneously. Do the homework and shortlist maybe the top three lenders and then finally settle on one for the loan to increase the chances of approval. Additionally, multiple loan applications without loan approval will adversely affect your credit score as well.
- Provide factual information and ensure proper documentation:
To increase the possibility of getting your loan approved, it is essential to provide factual information about your residence details, annual income, past loan repayments etc. and ensure that proper documentation has been furnished in support of your information for the purpose of verification. However, lender may also call you to verify your information personally.
- Apply for an amount which is within your repaying capacity:
Loan applications often get rejected because people apply for an enormously huge amount, which is way beyond their repayment capacity. Lenders conduct a check of your income and repayment ability before approving a loan. Hence, apply for a realistic amount in order to avoid a loan rejection.
- Don’t agree to be someone’s guarantor unless you trust them completely:
Signing as a guarantor to someone else’s loan is a big responsibility. It means that you are accepting the responsibility of repaying the loan if the loan applicant fails to repay it on time. Some banks might reject your personal loan application owing to the fact that you are a guarantor for someone else’s loan. The probability of rejection of loan application increases to a large extent if the person for whom you had signed on as a guarantor failed to repay his/her loan.
- Maintain job stability:
Banks and lending institutions require applicants to have a stable work history. Most lenders require the applicants to have at least two years of work experience in a particular job with a regular stream of income. You need to avoid switching jobs if you are planning on applying for a loan.
Thus, before applying for personal one should have the proper knowledge and understanding of personal loan documentation process, eligibility criteria, repayment options and other factors to reduce the risk of rejection of the loan application.