Emergencies never come announced, and they take your breath (and money) away with their magnitude. You are left panicking and scrambling to gather the necessary money to meet the emergency. After checking your bank balance, you realise that you don’t have much money in your bank account to pay for the requirement.
At this juncture, a friend or office colleague suggests taking a personal loan from a good personal loan app so that you get the money faster and in an efficient way. It seems like an attractive proposition, but you have never borrowed this type of loan before. While you race against time, you don’t want the application rejected on any grounds. It helps to be careful with the process and proceed with caution, and this article tells you how.
Consider the top 4 ways to not get your loan request rejected:
#1 Applying with a high credit score.
Most first-time personal loan applicants are unaware that their credit score can make or mar their chances of getting the loan in the first place. If you have never borrowed a loan before, you will most likely have zero credit – the lending institution will have no point of reference, and your application might be rejected on this front. But there are some leading easy personal loan apps that offer unsecured loans even to first time applicants, so you can borrow the loan from these quarters using your smartphone. On the other hand, if you have borrowed other loans previously, you will have a credit score to speak of. Check it online (from the CIBIL or Experian sites) and see if it is 750 or above. If it is lower than 750, you might have some difficulty securing the personal loan.
#2 Applying with the correct documents.
Another area of the personal loan application process that seems straightforward enough – but sometimes isn’t – is the documentation factor. Lending institutions list the documents they need to support your application. If you inadvertently attach the wrong documents, or documents whose information has not been updated (address proof, for instance) then the chances of rejection are higher. Take a close look at the list of documents and get the originals out. Check the original documents carefully to see if all the information present in them is correct and updated. When satisfied that the documents are correct, you can make copies of the same and self-attest them. These can then be picked by the representative from the personal loan app office to process the application.
#3 Applying without a history of loan defaults.
You might have borrowed secured loans such as home and car loans in the past. If you have repaid them in full or part as per the EMI schedule, then you will have a good repayment record. But if not, then you will have a black mark against your name – leading credit bureaux note these details and they go into your credit rating report. It lowers your credit score and hampers your chance of getting a personal loan. Since it is an unsecured loan, the lender is careful about screening the right applicants to avoid a potential loan default. We recommend checking your credit report before applying for the loan.
#4 Applying without any other loans being serviced at the time of application.
Taking off from the above point, it is recommended that you wait to apply for the personal loan if you are currently servicing other loans. If you have already repaid other loans, then you are in the clear. But if not, the lending institution will be cautious about lending the loan: the more loans to your name at a given time, the more your income is spent on repaying EMIs. Ideally, your EMI outgo should not exceed 50% of your monthly take-home income. If this is your current situation, you would do better to either consolidate the debt under one loan, or wait to repay most or all of them before applying for the personal loan.
- Download the personal loan app of your choice and install it. Complete the set-up process as directed in a few steps.
- Study the loan product in detail to understand all its various facets: interest rates, documents required, processing fees, eligibility criteria, personal eligibility for the loan, repayment terms, late payment charges, etc.
- Apply as directed and keep your documents ready to be picked up by the app’s representative.
- Await the app’s approval of your loan request. Once approved, the loan is disbursed to your account in a few minutes.
- Withdraw the loan amount and use it for the emergency.
- Repay the loan in a series of easy EMIs from your monthly job salary or business income.