First Time Loan Applicant? Read This Before You Apply
A personal loan makes it easier to buy expensive things or experiences, or even fund emergencies. But if you have never taken this loan before, you might be a little confused about what to do, which lending institution to approach for the loan, and what the application process is like. This article contains an easy primer on how to approach the loan process.
What is a personal loan?
It is an unsecured loan approved on the basis of your credit score, repayment history, current take-home income, etc. Lenders like banks, NBFCs and leading personal loan apps are empowered to approve and disburse this category of loan in India, to Indian nationals above 18 years of age with a proven source of income.
The personal loan is disbursed quite speedily and without much documentation, if you apply for it on a personal loan app. Are you about to apply for a loan? The following is a quick guide on how to do so to avoid mistakes and rejection:
Check your credit score
Start by checking your credit score. This is a number assigned to you based on your financial history, and it captures all your transactions till date (bill payments, account balances, other loan repayments, etc.) Most banks and NBFCs look for the CIBIL credit score to be 750 points or above (up to a maximum of 900) while leading personal loan apps check CIBIL and Experian scores, as well as rely on their own AI-backed algorithms to determine credit worthiness. You can check your credit score online. Do note that your application for the personal loan will be rejected based on a low credit score, so this is an important first step.
Check terms of the personal loan
Next, you can download the preferred loan app on your smartphone. Set it up as required and browse the personal loan section. Under this, you will find all the information pertinent to the loan – rate of interest, eligibility for the loan, loan tenure, documents list, application procedure, processing and late payment fees schedule, repayment details, etc. Check everything thoroughly and request a call back or send an email query if you are unclear about certain aspects of the product.
Get your documents sorted
The personal loan app lists the documents to be uploaded for the application. These are:
Residence proof (Utility bill showing your name OR leave and licence agreement in your name showing you as the lessee)
Personal ID proof (Aadhaar card/Voter ID/driver’s licence)
Income proof (latest salary slip)
Bank statement (showing salary credit for three consecutive months prior to application)
Photo ID (selfie or clear close-up photograph showing all facial features clearly)
Apply for the loan
You can now proceed to apply for the loan. Self-attest all the required documents and take clear photographs of them. Now proceed to upload them as directed and complete the application. You can now await the app’s approval (after checking your credit score and documents) before paying the processing fee. Once the formalities and paperwork are completed online, the app disburses the loan amount to your savings account in a few minutes. You can withdraw the money and use it as required.
Conclusion
The points listed above make the loan application process much easier to understand. Do ensure that you work with a leading loan app in India to get the best personal loan that offers high flexibility and low processing fees.
