Are you planning to get your hands on a personal loan for your financial needs? Think, and we are here to help. Know the step-by-step process of applying for a personal loan.
Personal loans help borrowers get over their financial humps, pay debts faster, cover emergency expenses, or make big-ticket purchases easily. Easy personal loan eligibility conditions make these online loans accessible to everyone. Their unsecured nature does not put any asset at risk, and flexible repayment terms make repayment possible without stressing their finances. One may borrow a personal loan to cover a myriad of expenses, including a wedding, debt consolidation, education, vacation, home improvement, or medical emergency. However, before applying, it’s essential to know the steps involved in the process.
Familiarising yourself with the steps involved helps avoid surprises and know what to expect. So, we have divided the entire loan procedure into eight easy personal loan process steps.
- Assess Repayment Capacity
Before taking a personal loan, the applicants must check their monthly budget and see if they can afford the loan EMIs conveniently. They will need this information to select their loan amount and repayment tenure.
- Calculate the Loan Amount
Many personal loan lenders provide generous loan amounts, depending on the applicant’s income, DTI ratio, and other eligibility conditions. However, over-borrowing will only increase the loan cost and stress the finances. Therefore, it’s wiser to calculate the expenses and borrow a loan amount according to the repayment capacity.
- Check the Credit Score
Lenders determine an applicant’s loan amount and interest rate based on their credit score. The applicants must check their credit score and ensure it is good enough to grab a favourable deal on a personal loan. If not, they may borrow a smaller loan at an unreasonably higher interest rate.
- Confirm Eligibility
Each loan application pulls a hard inquiry on the applicant’s credit report. So, before applying, they must check the lender’s personal loan eligibility conditions and ensure they qualify to avoid rejection.
- Compare Lenders
Prospective borrowers can get the best loan offer only when they choose their lender diligently. They must do some research while comparing lenders based on their interest rates, eligibility conditions, documentation requirements, processing charges, customer service, etc.
- Fill Out the Application Form
After finalizing a lender, it’s time to fill out the loan application form. Visit the lender’s website or download their app, find an online loan application form, and fill in the required details to apply.
- Provide the Required Documents
Many lenders do not require applicants to submit or upload their documents anywhere. If their KYC is updated, they may provide their KYC details and have them verified online within seconds. However, the applicants must check the lender’s documentation requirements and ensure they possess all the documents.
- Select a Suitable Repayment Term
Most lenders have flexible repayment terms that borrowers may select as suitable to their repayment capacity. Longer tenure keeps the EMIs smaller, while a shorter tenure saves interest but makes the EMIs bigger. Use a personal loan EMI calculator to select a loan tenure with easily adjustable EMIs.
Dreams may turn into reality if they are realistic. Follow these eight personal loan process steps to make a wise decision and apply for a loan with a higher chance of approval.
