In our life sometimes, even the best laid financial plans cannot save us in the difficult situation. In those instances, a quick personal loan can save our day. A personal loan is an unsecured collateral free loan which is sought to meet some urgent needs like a medical emergency, capital for business, funds for a wedding in the family, impromptu trips, or to consolidate debt.
The rate of interest in the personal loan is much lower than credit card payment, so the personal loan is always a better option when you require some urgent funds. The personal loan is one of the easiest and convenient processes of bailing your immediate financial needs. In today’s digitised world, this type of loan can be approved instantly by the financial institutions provided they found you creditworthy and your application process is duly complete. Here are a few tips to get your personal loan hassle-free.
- Know your Credit Score
Your credit score depends on your credit history, and it plays an important role in getting your loan approved in no time. The Reserve Bank of India has approved 4 credit bureaus to evaluate your credit score. These credit information companies are CIBIL TransUnion, CRIF HighMark, Experian India, and Equifax India. They are entrusted to fix your credit score, based on your credit history.
Among the 4 companies, the CIBIL or Credit Information Bureau India Limited is the oldest and the most trusted credit information company. Most of the financial institutions depend on the CIBIL score to approve your loan. They give you a credit score in the range of 300-900. A score of 900 is the best possible CIBIL score. You are given a credit score of -1 when you do not have any credit history and a score of 0 when your credit history is less than 6 months old. Most of the traditional financial institutions expect you to score more than 750 points to be eligible for a personal loan.
- Carefully Consider the Loan Amount
You should carefully consider the loan amount. This is because the banks tend to reject your application if they find the principal amount exceptionally high. The banks also are less interested to offer loans to those individuals who are paying multiple EMIs at the moment. So, fix your principal amount based on your annual income and your repayment capacity.
- Compare Options before Choosing
Most of the applicants consider only the interest rate as the key feature while deciding on the bank from which to avail the loan. It is always better to consider all the factors like maximum loan amount, processing fees, loan tenure, and foreclosure charges before you take a final decision on the personal loan offer.
- Ensure Submission of all Relevant Documentation
The documentation process of the personal loans is one of the simplest in the category. So, here is literally no margin for error in the documentation process. Read the loan application form carefully before you start filling it. You should also double check the form and the relevant documents; to be sure they are attached properly attached. In case of online filling up of the form, properly upload all the scanned copies of the documents. If the documentation is not done properly, the fund disbursal may take a lot of time. In some cases, the loan may also be rejected by the bank due to an error in the application form.
- Avoid simultaneous applications
Every time you apply for a personal loan, the details are saved in the banking software and they show up on your credit report. This is termed as “hard look” in banking terminology. If you generate multiple queries for a loan within a short period of time, then you would be deemed as “credit hungry” and this would reflect negatively on your credit score. So, be very careful while applying for the loan.
So, this was in short, a few tips to get a hassle-free personal loan.