The personal loan segment has witnessed a robust growth of 12.3% in FY2022. The instant availability of funds is responsible for the exponential growth of personal loans.
The majority of the population considers a personal loan a quick-fix solution and affordable alternative to other credit options, helping them meet financial urgencies effectively and saving their life savings from getting exhausted. Moreover, it is a collateral-free loan option with simple eligibility criteria and documentation, adding further to its increasing demand.
However, borrowers need to know the ins and outs of the credit option before a personal loan apply. Not knowing the intricacies will lead to loan application rejection and make the borrowing counterproductive.
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Things to know before applying for a personal loan online
Here are some vital pointers that borrowers should factor in before going to apply for a personal loan online to make the borrowing profitable:
- Maintaining a decent credit history: As a personal loan is an unsecured credit option, lenders scrutinize borrowers’ credit score thoroughly before deciding on the loan amount. A decent credit score of 750 and above suggests that borrowers have a good repayment history; hence, they have a higher chance of having a substantial loan in their accounts. Moreover, a decent credit score will help borrowers fetch a lower interest rate.
- Choose the right loan amount: Borrowers should judiciously borrow money online depending on their financial needs and requirements. They should list their needs and urgencies, prioritize the one that demands monetary assistance, and accordingly choose the loan principal. Moreover, the loan amount is dependent on whether the borrower is a salaried individual or self-employed individual or has existing debt obligations or not.
- Compare interest rates: The affordability of the borrowing hinges on the personal loan interest rate. Hence, borrowers should compare different lenders and settle for one offering a nominal interest rate, making the payment of EMIs easier. Moreover, borrowers should be well aware of the factors affecting personal loan interest rates.
- Assess additional charges: Apart from focusing on personal loan interest rate, borrowers should mandatorily consider the additional charges like processing fees, late payment fees, part-prepayment fees, cheque bounce charges, foreclosure fees etc., as all these charges significantly contribute towards loan expenditure.
- Eligibility criteria: This is perhaps one of the most critical parameters that borrowers must adhere to before applying for a personal loan online. Borrowers will have to meet primary qualifying factors like age, nature of employment, income status, and credit score. However, different lenders set different eligibility criteria.
- Proper documentation: While applying for a personal loan, borrowers will also have to keep the necessary documents like KYC paper, bank statements, salary slips, etc., in order. Keeping these documents makes application procedure hassle-free and easy.
- Determine repayment capability: It is equally essential for applicants to consider the loan principal they can afford to repay. In this regard, they should analyse their monthly income status, other financial liabilities, existing debt and more. Not being able to repay the loan amount will adversely impact the borrower’s credit score. In this regard, borrowers should use an EMI calculator and know how to calculate personal loan EMIs beforehand and choose a suitable loan tenor.
Furthermore, borrowers should consider their current liabilities. For example, if there is an existing loan to repay or credit card dues, applicants must compute the debt-to-income ratio to check if they will have enough funds to repay the loan amount they have opted for now. Also, borrowers must read the terms and conditions associated with the credit option and check the foreclosure rules.
Besides, considering the factors mentioned above, borrowers should emphasize the reasons for personal loan rejection and how to avoid them.
Know how to apply for a personal loan online
Here are steps that will help borrowers apply for a personal loans online:
Step 1: Firstly, visit the official website of the preferred lender.
Step 2: Now click on ‘Apply online’, provide mobile number and OTP and get redirected to the online application form.
Step 3: Fill out the form with personal, professional and property details.
Step 4: Provide the loan amount and submit it.
By following the steps, borrowers will get instant access to the loan amount in their accounts.
Besides getting instant access to funds, borrowers can also reap the advantages of the exclusive pre-approved offers extended by renowned financial institutions like Bajaj Finserv. These offers are available on an array of financial products like personal loans, business loans, credit cards, etc., and help in expediting the lending process. Willing borrowers can check the pre approved offers by submitting their names and contact details.
In conclusion, borrowers must have pertinent information regarding a credit option before availing it. A personal loan is a multi-purpose loan aiding one in funding any of his/her personal and professional contingencies. However, to make the most of it, borrowers must have a well-rounded idea regarding how to apply for personal loan online and other intricacies related with it.