Personal Loan Application Process
A personal loan is a simple short-term loan which could be used for any legitimate purpose. You won't be required to pledge any form of collateral or security. It can be used to meet immediate personal expenses like a medical emergency, sudden loss of job, to fund a wedding / higher education, used as capital for business or to consolidate debt.
A personal loan has several advantages including relatively simple documentation, no need for collateral, and no restrictions on how you use the money.
However, there is a downside—a personal loan is one of costliest loans in the market as it comes with high interest rates. This can be attributed to the fact it is an unsecured loan and the lender charges high interest rates to safeguard their money against potential default.
The personal loan application process is generally simple and hassle free, so much so, that you can walk in to your nearest (existing) lender's branch, and walk out with a personal loan. Following is some of the key features of a Personal Loan:
• Short-term loans for salaried & self-employed individuals.
• Simple documentation, and quick processing
• Over-the-counter loans with leading banks like HDFC and Axis subject to certain conditions
• Flexible tenure—choose from tenures ranging from 1 to 5 years
• No collateral, security or guarantor required
• Special offers for professionals like doctors, chartered accountants, company secretaries, etc. depending on the lender's policies.
• Facility to apply online with most of the lenders
• Special offers for existing customers like a reduced interest rate
• Loan amount starting from a few thousands to many lakh
Process of applying for a personal loan
Once you have decided that you need a personal loan, obtain a copy of your credit report from the Credit Bureaus. Typically, you need to have a credit score of 700 and above to qualify for a low interest personal loan. A credit score of 700 or above is considered good, although you may be accepted for a loan below that score too, albeit at very unattractive terms like a high interest rate.
If your credit score is low, make a commitment to improve it. It can take anywhere from a couple of months to a year to improve your credit score, depending on the severity of your credit situation.
Ok, got it. What next?
Needless to say, shop around for the best personal loan offer that suits your budget and needs. Simultaneously, shop around for the best interest rate possible. This is extremely important, as even a 0.05% reduction in the interest rate could mean savings of a significant amount of money in interest costs. Thoroughly research the various loan offers available in the market. Be absolutely sure of all the fees and charges involved with the loan, as that might, and will put a considerable dent in your pocket. Compare the features and benefits to determine which loan offer best fits your income and credit profile.
Great! I have done the research, what next? Apply for a personal loan!
You can check your eligibility and apply for a personal loan by signing up with CreditMantri. It is quick, simple and above all, free.
CreditMantri matches your credit and demographic profile to the lender's lending criteria and presents you a shortlist of only those lenders willing to lend to you based on your unique credit profile. In effect, we pre-screen your application to make sure you are likely to qualify as per the lender's credit criteria. Hence, the chances of your personal loan application getting approved is higher.
Click here to sign up and apply for loans and credit cards, the CreditMantri way!