Personal Loan

Personal Loans are being used by an increasing number of people to cover higher bills. One of the reasons for the surge in popularity of Personal Loans is that they are unsecured loans that do not demand collateral and have a rapid processing period. Any bank or non-banking financial institution can effortlessly provide you with a Personal Loan. You can avail of the benefits of Personal Loans instantly with the hassle-free and easy loan disbursement policy of the financial institutions. 

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What is a Personal Loan?

Personal loans are unsecured loans offered by financial institutions and are based on factors such as employment history, repayment capacity, income level, profession, and credit history. A personal loan, also known as a consumer loan is a multi-purpose loan that can be used to cover a variety of immediate requirements.

Advantages of Getting a Personal Loan from ReferLoan

Eligibility 

• Age of applicant - The age of the applicant always plays an important role in the rate of interest as well as the tenure of the Personal Loan and the minimum age should be 21 Years and the maximum age decided is 60 Years.
• Income of applicant: the loan amount is decided by the income of the applicant and the income should not be less than Rs.15,000/- per month some banks do consider an in-hand salary of Rs.13,000/- per month as well.
• CIBIL score: it was always recommended to have a CIBIL score of 700 and if your CIBIL score is no less than 650 then you’re also eligible for the loan amount.
• Continuity of Job: this differs from different bank policies and requires a minimum 3-month job or more.
• Occupation: the eligibility is different, but the applicant who is salaried employees, self–employed professionals, self–employed nonprofessionals, and private limited companies are applicable.

Required Documents to Apply for a Personal Loan 

• PAN Card of the applicant
• Aadhaar Card of the applicant
• Driving Licence of applicant
• Voter ID of the applicant
• Passport of applicant
• Registered rent agreement of the applicant
• Current passport size photograph 
• Salaried income documents
  • Last 3 months' salary slip 
  • Form 16 of last 2 years
  • Income Tax Return if any of last 2 Years
  • Last 3 months' bank statement if the salary directly credited in the bank account
  • Certificate of employment from current employer
• Self Employed person documents
  • Income tax returns of previous 2 years
  • Statement of finances with a proper balance sheet with profit and loss in that sheet
  • Bank statement with continuity of business
  • GST registration evidence of business
• Other documentations
  • Cancel cheque or bank passbook front page copy
  • Any recent loan with a proper repayment sheet

Other Details You May Need Before Applying for a Personal Loan

What is the maximum loan amount you can get?

The maximum amount you can owe is determined by your income, career, and the lender’s evaluation of your loan application. Generally, lenders approve loans based on their calculations, ensuring that the EMI does not exceed 40% to 50% of your monthly income. When assessing the loan amount, lenders also verify your outstanding debts.

If you own a business or are self-employed, the lender will calculate the loan amount based on the profits you earn and record it on your profit and loss statement. If you are a salaried employee, the lender will calculate the loan amount depending on your pay and other obligations.

How important is a Credit Score for the approval of a Personal Loan?

Your credit score reflects how responsible you are for handling your credit. Personal loan applicants with high credit scores, often 650-700 and above, demonstrate credit discipline and hence have increased chances of being approved by banks and NBFCs. However, some banks and NBFCs charge higher interest rates for personal loans to people with bad credit. Such applicants are also more likely to be approved for personal loans with reduced interest rates. As a result, one should check their credit ratings on a frequent basis. Individuals with no or low credit scores can use secured credit cards to improve or rebuild their credit.

Tips for successful Personal Loan application

When looking for a personal loan, there are a few factors to keep in mind. Check out this list of the most useful tips for dealing with personal loans: 

1. Credit Clean-up: Your credit score is one of the most important variables that lenders check. A high credit score makes it easier to obtain a personal loan. If your score is poor, you should double-check your reports for any inaccuracies. Sometimes, simple inaccuracies can have a negative impact on your scores, and you must submit them to CIBIL if you discover any.
2. Rebalancing your income and debts: When you apply for a personal loan, lenders will ask for proof of income to determine your debt-to-income ratio. To boost your annual income, consider selling liquid assets like stocks or taking on a part-time job. This will raise your debt-to-income ratio and your chances of getting approved for a loan.
3. Consider Co-signers/Guarantors:  If you’re having trouble getting a personal loan on your own, you can apply with the help of a co-signer or guarantor. A solid credit score is required of the individual you choose as a guarantor. Their primary goal is to ensure that you return the debt. They will, however, be responsible for repaying the debt if you are unable to do so. Choosing someone with a credit score of 650-700 can significantly improve your chances of obtaining a personal loan.
4. Limit Borrowing: Asking for more money than you need to fulfill your financial goals can be too risky. Make sure you figure out how much you’ll need and just apply for that amount.
5. Choose the Right Lender: When it comes to credit scores and income, each lender has its own set of requirements. Choose a lender whose eligibility criteria you fulfill and apply accordingly while looking for personal loans. The trouble with applying to many lenders is that each one will examine your credit score, and each time your full credit report is accessed, your credit score declines slightly.

How can we avoid the rejection of the Personal Loan application?

Many factors influence the approval of a personal loan application. When applying for a loan, make sure you meet all of the requirements to ensure that your loan application is approved. Personal loan eligibility standards differ from one lender to the next. However, there are certain common requirements, such as the applicant’s age, income, credit score, employment status, and so on. Make sure you meet all of the qualifying requirements before applying for a loan. This will assist you to avoid having your loan application rejected. Although you have alternative options if your loan application is initially rejected, it is essential that you double-check before applying to avoid the chances of rejection of the loan. 

How ReferLoan can help in getting a Personal Loan?

• Wide Choice: Choose from 175 banks & NFCs that include HDFC Bank, SBI, Axis Bank, ICICI Bank, IndusInd Bank, and more.
• Chances of Approval: ReferLoan has a unique feature called ‘chances of approval,’ which compares your credit profile to several lending criteria used by banks and NBFCs to determine the likelihood of your loan application being accepted – Excellent, Good, Fair, or Poor – for each lender.
• Pre-approved Personal Loan Offers: Our customers receive pre-approved personal loan offers from our partners based on their credit profiles. Our pre-approved personal loan offers have a high acceptance rate, need little documentation, and are available immediately.

Expert Assistance: Customers can choose the best personal loan offer for their circumstances with the help of ReferLoan’s team of specialists. Our team of experts from various financial fields advises customers throughout the loan process, from application to disbursement to cancel out any possibility of getting their applications rejected.

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