A personal loan is a financial instrument that helps individuals fulfil temporary financial emergencies. According to the survey by CRIF High Mark, in terms of value, the personal loan origination in December 2021 was more than Rs. 1.47 lakh crore.
Therefore, if you are a prospective borrower planning to apply for a personal loan, keep reading to know the 5 simple application steps. Furthermore, the next segment will provide in-detailed insights about the benefits of obtaining this credit option.
What are the 5 steps to apply for a personal loan?
With the non-stop march of digitalisation and automation in every sector, potential applicants can obtain personal loans from the comfort of anywhere. However, before applying for one, it’s important to conduct thorough market research to find the best lender-
Step 1: Go through the eligibility criteria set by your lender
As a personal loan is a collateral-free credit option, lenders set stringent eligibility criteria to confirm the applicants’ creditworthiness. Therefore, it is crucial to meet the eligibility criteria to steer clear of loan rejection.
These criteria vary with the lenders. However, a few of them are common, including:
- Applicants must be residing Indian citizens.
- Applicants must maintain a credit score as high as 750 or above.
- The age limit should be between 21 years to 67 years.
Step 2: Fill up the application form
Individuals can download the personal loan application form online or collect it directly from the nearest branch. Typically, a personal loan form asks for details, such as:
- Personal details, such as name, age, address, etc.
- Financial and employment credentials, including place of work, monthly income, company-specific details (for self-employed individuals), industry type and more.
Step 3: Choose loan amount and tenor
Applicants must decide the loan amount based on their monthly income, and obligations. Depending on these factors, including the applicant’s CIBIL score, the lender levies an appropriate personal loan interest rate.
In addition, prospective borrowers can evaluate their EMIs payable online beforehand to manage their finances efficiently. They can calculate it using the interest calculator available on the lenders’ websites.
Nonetheless, you must consider all 4 factors that affect your personal loan interest rate while comparing options online to settle for the best option per your repayment capacity.
Step 4: Attach the documents
Applicants need to substantiate the authenticity of their inputs on the application form. Thus, lenders ask for a set of documents at the time of loan application. This set of documents varies from lender to lender. A few of them include:
- KYC documents
- Aadhaar card
- PAN card
- Voter ID
- Driving licence
- Proof of employment
For salaried individuals:
- Identity card
- Salary slips for the last two months
- Bank account statements for the last three months
For self-employed individuals:
- Business proof documents
- Income tax returns
- Last year’s turnover
Step 5: Loan application approval
The lender will assess the application form and verify the documents before disbursing the loan. Lenders generally take around 3 to 5 working days to complete the authentication process and disburse the amount into the applicant’s account. However, if the borrower has a high credit score, the chances of fast disbursal are higher. Therefore, if your score is below 750, look for how to get personal loan with a poor credit score.
Now that you know how to apply for a personal loan, learn about the benefits of online application to strategise your expenses accurately.
What are the benefits of applying for a personal loan online?
Here are a few benefits that make it the most sought-after choice among borrowers-
- A personal loan has no end-use restriction and thus is a go-to option to make big-ticket purchases or sustain any cash crunch. It includes:
- Medical emergencies
- Higher education
- Relocation, etc.
- After you apply for a home loan online, you can track the application status and make timely repayments from the convenience of anywhere.
- To do away with the conventional way of loan application verification, lenders employ automated algorithms to verify the authenticity and credibility of the applicants. This accelerates the disbursal process.
Apart from these, several renowned NBFCs like Bajaj Finserv extend pre-approved offers on both secured and unsecured credit advances to simplify and accelerate the application process. You can check your pre-approved offer easily with your name and contact details.
Nonetheless, apart from comparing the interest rate, prospective applicants must factor in the associated charges, such as the processing fees, foreclosure and pre-closure charges, penalty for late payments, etc., before they apply for a personal loan. This will help them to meet their liquidity crisis with ease.Read