Getting a loan today is easier than ever if you know how to do it right. Traditional banking and other financial institutions had a complex loan application process. It led to unnecessary delays in the processing and disbursement of a loan. In the contemporary scenario, it is very easy to get an instant loan online. All you need to do is visit the website of your loan provider and make an easy online application. Before you do this, make sure that you match the eligibility criteria set by the financial institution. Read on to learn about some effective tips for loan applications in India.
1. Maintain a Good Credit Score
One of the most important things that any lending institution will check before approving your loan application is your credit score. A credit score is a numeric representation of your creditworthiness in the market. It is given based on your historical credit track record, including your repayment history. A credit score over 750 points is a good achievement and can help you get favourable terms on the loan. You must try to maintain a credit score of over 700 if you want to get easy approval on your instant loans.
2. Always Use the EMI Calculator
EMI calculators are present on the website of most online loan providers. It can be used to easily accurately calculate the monthly EMIs that you will have to pay. Manual EMI calculations can be wrong at times. This can be counterproductive to your monthly budgeting process. You can check EMIs for different loan amounts and interest rates using this tool. Before taking any loan, make sure that you will be easily able to repay the EMIs.
3. Maintain a Healthy Bank Balance
Maintaining a good bank balance in your primary account will help you get easy approval on your loan application for instant online loans. Most lending parties ask for your bank statement for the past few months. Maintaining a good bank balance will give the impression that you have the repayment capacity. Your ability to repay the loan amount is an important factor that helps with your loan approval.
4. Include all Income Sources
There are minimum income eligibility criteria set by most financial institutions for issuing a loan. Applicants must have a monthly income over the specified minimum amount. You must include all your income sources to calculate the total income. Multiple sources of income also increase your repayment capability, which makes it easier to get loan approval.
5. Compare Different Loan Providers
Comparing different loan providers is one of the most important things that you must do to get the best deal. You don’t need to physically visit different financial institutions to compare offerings. One can easily visit their website to check the terms and conditions associated with different loan products.
6. Don’t Apply to Multiple Parties
This is one of the most common mistakes that loan applicants must avoid. You should not apply for a loan with multiple parties. Every time you apply for a loan with a lending institution, they will conduct a hard-line credit enquiry. This will reduce your credit score by a few points. So, applying with multiple parties will lead to multiple hard-line enquiries which can decrease your credit score and lower your chances of loan approval.
7. Provide Accurate Data
You must always try to provide accurate income and personal details to avoid any hiccups in your loan process. If the information provided doesn’t match the official records, it can delay your loan approval process. Providing wrong information to get a loan application can also lead to outright rejection.
8. Decide Your Loan Amount
Just because you are eligible for a loan doesn’t mean that you must apply for a high loan amount. You must decide on your loan amount before applying. It should factor in your needs and repayment capacity.
9. Keep a Low Debt to Income Ratio
If you want to get easy approvals on your instant loan online, make sure that you have a low debt to income ratio. Ideally, a ratio lower than 30% will help you get a loan easily.
10. Keep all your Documents Ready
You will also need a digital copy of important documents such as ID proof, address proof, income proof, PAN card, etc. if you are applying for a loan online. If you apply for an instant loan online without documents, your loan won’t be processed.
