In present times when inflation is at an all-time high and growing, affordability of big-ticket expenses is often a concern for many. Such expenditure may be required for a wide range of purposes, right from your child’s higher education to overseas travel and wedding. Certain circumstances may also require you to arrange finances at short notice, making it essential to keep at disposal a means of financing that serves right during emergencies. In such scenarios, a personal loan can be just the right financing option you can look forward to securing. A further digitization of the lending market has made these loans more accessible than ever. Today, you can apply for an online personal loan in a few simple steps only right from the comfort of your home.
Several other factors command the availability and usefulness of these digital advances. When availing a digital personal loan, you can make use of a few tips that should help serve your purpose better and aid in availing the advance.
Tips to Avail an Online Personal Loan with Ease
Below are given some tips that you can follow when applying for an online personal loan. Doing so should help improve your chances of approval and allow access to funds in a short duration.
Apply for only as much as you need
When applying for a personal loan online, it is ideal to first create a budget and ensure the maximum financing need for you. Identifying your purpose of availing the loan and assigning the necessary amount to such purpose gives you as well as the lender a clear picture as to what the loan amount would be used for. You must thus also choose a loan amount that does not exceed such financial need. Excessive loan amount sought not only puts unnecessary burden on your repayment capacity but also represents you as a credit-hungry individual.
It is thus necessary that you identify and seek a loan amount only up to the extent it is needed. Once the lender can understand your financing priorities and why you need funding, it gets easier to convince them of your financial planning and avail funding online without much hassle.
Check your repayment capacity and choose loan amount accordingly
Before applying for a personal loan, you must also be sure of what your repayment capacity stands as. Your repayment capacity would comprise the amount that is left after deducting your fixed liabilities and existing plus expected expenses from your monthly income. Sometimes, repayment capacity is also computed after taking into consideration the new liability creation as EMIs payable for the loan you are about to take. Ideally, the amount excluding your fixed monthly liabilities should not be less than 50% of your monthly income.
Based on this, you can choose a loan amount that keeps your repayment capacity above 50% of your monthly income, including the new EMI payable. In case your expenses exceed the limit, you can choose to repay existing liabilities to improve your financial standing. Doing so before applying for an online personal loan shall improve your chances of approval and help avail funding at short notice.
Choose a suitable tenure with the help of EMI calculator
When deciding on the terms of loan from your end, tenure selection can have significant contribution. The repayment tenure you select determines the EMIs you would end up paying every month until the total repayment completion.
To choose the right repayment tenure, you can make use of a personal loan EMI calculator. It is a dedicated financial tool that allows you to accurately compute your loan instalments through a few essential entries like the loan amount sought, the tenure for repayment, and the interest rate applicable. Once you have made the entries, check the EMI amount’s affordability as per your financial standing. You can further make changes to the entries to arrive at an EMI that best suit your repayment capacity. This should enable easy approval of your personal loan online.
Find a personal loan with minimum eligibility requirements
Personal loans that come with simple and minimum eligibility requirements often receive quick approval as well since individuals can match the criteria conveniently. It is thus ideal to seek a lender who requires you to meet only a handful of simple personal loan eligibility requirements. Some common criteria that you can find among the best lending institutions for personal loan approval include the following.
- Individuals should be either salaried or self-employed.
- If salaried, they should be working with an MNC, a public or a private company and hold a minimum work experience of 1 year.
- In the case of self-employed loan seekers, a minimum business vintage of 3 years in needed to conform business and income stability.
- Applicants must also be residing Indian citizens.
- Age limit for each applicant applies too, which is between 25 and 58 for salaries and between 21 and 70 for self-employed.
Accordingly, you must provide all documents as well to establish your personal loan eligibility when applying for the advance.
Keep all documents ready when applying
Another way to streamline your online personal loan application and fast-track loan processing after application is to keep all necessary documents ready. Doing so allows you to submit the documents and complete paperwork alongside sending your loan application. This enables the lender to process your application without any delay and helps assess your eligibility for the advance easily. For easier approvals, you can provide all documents of primary and secondary income sources as well.
Apply with a co-borrower
If your financial profile doesn’t match or exceed the lender requirements, you can also add a co-borrower to your loan application when availing the advance both online and offline. Choose a co-borrower keeping in mind their income as well as previous credit record for improvement in the overall eligibility for personal loan. Whether availing an offline or an online personal loan, credit score of the applicant can be the determining factor due to its unsecured nature. Check if your credit score is above 700 or not and take steps for improvement before applying to improve your chances of instant financing approval.
Frequently Asked Questions (FAQs) For Personal Loan Documents
Q1. Do all lenders ask for the same list of documents?
The required documents may vary slightly from one lender to another, but most are the same. Depending on the needs of the lender and the type of loan, applicants may be asked to submit additional documents as and when required.
Q2. Do I have to send my original KYC documents when applying for a personal loan?
No, you only need to send photocopies of your KYC documents (self-attested). However, it is advisable to keep the original documents with you in case the lender needs to cross-check the copies with the original documents when applying for a personal loan.
Q3. Does Form 16 count as proof of income?
For self-employed people looking for personal loans, online statements are considered proof of income by banks and lenders. Self-employed individuals must also present a calculation of their income and a profit and loss account for the last two years. These documents must be certified and verified by a chartered accountant. They must also submit a copy of the sole proprietorship declaration or a certified copy of the company deed. Applying for a personal loan doesn’t have to be stressful. Be prepared to answer questions and provide the required personal loan documents, and you’ll likely have a smooth experience borrowing the funds you need.