5 Factors that would Assist in Personal Loan Approval
Looking out for a personal loan to meet some urgent financial requirement? Worried about whether or not your loan application will get approved? Here are a few pointers that would help you ensure that your chances of getting a loan approved is high:
Maintain a Good Credit Score
It is necessary that the applicant has a good credit score in order to avail a personal loan. The credit history of the applicant is one of the first factors taken into consideration by the lender, while processing a loan application. If the applicant has a poor credit score, he/she will not get an approval for the loan. However, those with an average credit score might get the loan at a higher rate of interest. With a good credit score and other favorable factors, the applicant can be assured of the personal loan approval. In order to ensure that your CIBIL score is high, pay off your dues on time and repay any outstanding credit.
Get a Co-Applicant for the Loan
The income of the individual is another crucial factor that affects the approval of the personal loan and the loan quantum. In order to have better chances for loan approval from a bank, the applicant can add a co-applicant to the loan application. By doing so, the income of the co-applicant will be clubbed with that of the applicant and this increases the income eligibility to avail the loan. It also convinces the lender of the borrower’s repayment capacity and involves less risk because if the borrower is unable to repay the loan, the co-borrower is legally liable to repay the loan on his/her behalf. The maximum number of co-applicants permitted by banks for applying for a personal loan is up to 6 people, including spouse, children, parents or siblings.
Show Accurate and Significant Income Sources
By providing accurate information about your income sources and adding the amount you receive as perks or incentives to your salary, you can improve the chances of receiving a personal loan approval. The debt to income ratio of the applicant is evaluated by the lender in order to understand the repayment capacity and credibility of the applicant. If the income received from various sources is high, then it reflects upon the repayment capacity of the individual. The bank is assured of lesser risk so the loan application will be approved.
Repay Any Outstanding Loan
In order to increase your chances of getting a personal loan application approved, you should make sure that you do not have too many outstanding loans. Before applying for the loan, repay any outstanding loan if possible. This would improve your credit score as well as positively reflect on the debt-to-income ratio. This is a factor that would significantly increase your chance to avail the loan at an affordable rate of interest.
Pre-approved Loans
Pre-approved personal loans are also a sure fire way to get a loan quickly and easily. These loans are offered by banks with whom you have a relationship with and based on the transaction history and income flow of the individual, the bank will assign a pre-approved loan amount to the customer. This will be offered at an attractive rate of interest and requires minimal documentation to process. However, these are just provisional approvals and in order to complete the process you have to submit an application form with relevant documentation and follow other eligibility criteria set by the Bank.
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