A personal loan is a flexible and convenient way of fulfilling your dreams when you are in need of funds. So long as you can plan to pay it back in a timely manner, a personal loan can help with your medical emergencies, wedding expenses, unexpected or planned travels, or major home renovations – talk about the wide range!
But there are certain factors you need to consider before taking advantage of this loan. Read on to learn more.
6 Factors That Help with Instant Approval on a Personal Loan
Improving the following factors can get you better interest rates on personal loans and speed up your approval process:
1. Credit Score
Like any other loan, even personal loans require a good credit score. A credit score is a report that has your debt repayment history. It also records other things like the number of times you took a loan and your previous experience in managing debt. You need to maintain an excellent score as lenders use it to measure your repayment creditability, based on which they judge whether to trust you with their money or not.
The higher your credit score, the better chances you get of loan approvals! One way to maintain a great score is by keeping a clean credit history. Do not delay debt repayments and avoid taking multiple loans at the same time. If you have a credit card, maintain it by making timely payments.
2. Monthly Income
Monthly income is the deciding factor for many lenders. High income acts as a strong supporting factor when you take secured loans. You can get quick approvals. But for a personal loan, there is no such requirement. However, good earnings reassure the lender that you will make timely payments.
The income prerequisites differ depending on where you stay. It will be different for people residing in the metro cities than for people in the smaller towns!
3. Liabilities
Your current liabilities also play a significant role in getting loan approvals. The lender can turn you down if you have multiple existing different types of loans. So, if you are looking for getting your loan request accepted, avoid taking too much debt.
4. Job Stability
A personal loan for salaried employees requires job stability as it proves good financial condition and ensures timely repayments.
To improve your loan approval chances as an employee, you must have full-time work experience. Some lenders hold the prerequisite of having at least two years of experience in the current profession. Moreover, if you are self-employed, you are expected to have at least five years of earning turnover.
5. Age
For lenders, age is not just a number! It is a deciding factor. Usually, they prefer individuals within the retirement age – 23 to 58. This assures them that you will repay. However, for self-employed individuals, the age range extends from 28 years to 65. This is because self-employed people can work beyond the set retirement age of a standard office setup.
6. Repayment Period
When someone lends you money, it is evident that they would prefer the money back faster. Hence, the shorter your repayment window is, the more likely you will get loan approval. Your approval chances increase if you apply for a flexible personal loan. This type of personal loan has shorter repayment cycles. Know more about what is flexi loan here.
Bottom Line
Keep these six fundamental factors in mind before applying for any loan, and consider the eligibility criteria, as different lenders hold different requirements. Once you make yourself an ideal applicant, you minimise the risk of rejection the next time you apply for a personal loan!