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How to Increase Your Personal Loan Application Approval Chances?

How to Increase Your Personal Loan Application Approval Chances

Personal Loans are one of the most popular credit products available today. These unsecured loans are handy for planned and unplanned expenses like weddings, medical emergencies, vacations, higher education, home renovation, debt consolidation, etc. That said, you must check and calculate Personal Loan eligibility based on the lender’s criteria.

This article will discuss a few strategies to increase your chances of getting approval for your Personal Loan application.

What Makes a Personal Loan Ideal?

Their unsecured nature is one of the primary reasons people opt for Personal Loans to cover various expenses like medical emergencies, education, home repairs, weddings, vacations, etc. Unlike other loan types, these loans do not require any collateral or security for approval. Minimal documentation requirements and a 100% digital application procedure further ease and accelerate loan approval. Competitive interest rates, flexible repayment terms, and easy eligibility conditions are some other features and benefits that make Personal Loans ideal for borrowers.

How to Calculate Personal Loan Eligibility?

When you fall short of funds, you may approach a finance company to apply for a Personal Loan. If you are an existing customer, you may check if you have a pre-approved loan offer in your inbox. The Personal Loan eligibility criteria usually depend on the following factors:

  • Minimum and maximum age requirements
  • Indian citizenship
  • Employment, profession, and work experience
  • Monthly income
  • Credit rating and DTI ratio

If you qualify, approach the lender with your loan application and submit proof of your address, income, and identity to validate the details provided. The lender will thoroughly evaluate your application and send you a loan offer. You must carefully review and accept the loan offer to get disbursal in a few hours.

Tips to Improve Your Chances of Getting a Personal Loan

Top lending institutions like Hero FinCorp look at various factors to determine your creditworthiness. Here are a few tips to boost your chances of getting a Personal Loan approval:

Calculate Personal Loan Eligibility: Before applying for a loan, scan through the lender’s eligibility criteria and calculate your eligibility. Doing that will avoid rejection of loans for trivial reasons like income or age.

Track Your DTI Ratio: Using a large part of your monthly income to handle existing debts and obligations will reduce your creditworthiness to get a new or pre-approved loan. As a result, your chances of approval diminish, or the lender may charge a higher interest rate to cover up for the higher risk. Therefore, always maintain a DTI ratio below 40-50% to boost your chances of approval.

Apply for an Adequate Loan Amount: Calculate your expenses and apply for an adequate loan amount to get your application approved. Before applying for a loan, calculate Personal Loan eligibility using an eligibility calculator to check the loan amount you may qualify for. It largely depends on various factors, including your income, liabilities, repayment capacity, etc.

Avoid Applying for Multiple Loans Simultaneously: When you need urgent financial assistance, you may consider applying for multiple loans to boost your chances of approval. Although you may get approval from a few lenders, this is certainly not the best strategy to access a loan. Since every application pulls a hard inquiry on your credit report, it will eventually reduce your credit rating and your chances of approval.

Improve Your Credit Score: Lending institutions give a lot of importance to your credit score when scanning the loan application. Many lenders make credit scores a part of their eligibility criteria to calculate Personal Loan eligibility. Even if not, a good credit score improves your odds of getting the best loan offer at the most reasonable rates with favourable terms and conditions.

Making timely payments, reducing the DTI ratio, controlling credit utilisation, and diversifying the credit portfolio are the best strategies to improve your credit score and approval chances.

Add a Co-Applicant: Most Personal Loan lenders allow you to include your parent or spouse as a co-applicant. If the co-applicant’s income and credit rating are high, adding them to your loan application boosts your chances of approval even if your credit profile is not up to the mark.

Choose a Loan Plan Carefully: Before settling for a loan plan, thoroughly research all the available options and compare them to get the best deal. Even if you urgently need funds, avoid settling for the first loan deal you come across. These days, numerous financial players flood the market with competitive lending conditions. Stringently check and calculate Personal Loan eligibility to ensure you grab the best loan offer available.

Mention All Your Income Sources: When applying for a Personal Loan, the lender wants to ensure you can repay the loan on time without facing a financial crunch. So, apart from providing your primary income details, furnish additional information about your other income sources, including rent, interest, dividends, bonus, etc. A higher income will boost your chances of getting a loan approval and improve your eligibility for a bigger loan amount.

Opt for a Longer Repayment Tenure: A longer repayment tenure breaks down your EMIs into smaller amounts, reducing your financial burden and making repayments more manageable. Furthermore, smaller EMIs reduce your DTI ratio, increasing your credit score and boosting your chances of loan approval.

Enquire About Prepayment: Most lenders allow their borrowers to prepay their loans before the term completion. Always check for the prepayment option and the charges involved when opting for a longer repayment tenure. If you receive a lump sum amount during the loan tenure, you may want to pay off your loan with it to become debt-free sooner. However, check out the prepayment charges to ensure they do not exceed the interest saved.

These tips can help improve your Personal Loan eligibility and boost your chances of getting a quick approval. Choosing the right lender with the best loan offer will give you a seamless and stress-free experience from application to disbursal. If you have a solid repayment history, you may receive a pre-approved loan offer that can significantly accelerate your approval.

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