If you’re seeking a loan, you may have received calls or emails about pre-approved loan offers that promised low-interest rates and prompt disbursement. But even after you’ve completed the loan application and provided all the necessary documentation, your loan is still turned down for no apparent reason. When requesting personal or mortgage loans, the majority of us may have encountered comparable issues. This problem is made worse by the fact that most lenders rarely provide the precise reason for rejection. Knowing what it takes to have your personal loan in Jamnagar accepted will help you avoid this headache in the future.
How to increase the chances of your loan approval?
Check your credit score
The CIBIL score is used to assess a borrower’s credibility and is intended to anticipate their ability to make payments. The initial round of consumer filtering by lenders that offer unsecured loans is typically done based on credit ratings. Getting accepted with cheaper loan rates is much more likely with an excellent score. So, before asking for a loan, it is crucial to verify your credit score and understand where you are.
Income to debt ratio
Before you apply for a loan, ask the lender about the minimum salary criteria. For the purpose of calculating the borrowers’ income to debt ratio, lenders often review their latest three months’ worth of bank statements. The amount you can get as loan depends on your debt-to-income ratio. A greater percentage indicates that you are paying ongoing loans’ EMIs out of a sizable portion of your paycheck. Make sure your set monthly EMI payments are less than 35% of your monthly income to improve your chance of getting a loan.
Verify and submit mandatory documents
A consistent cash flow and a high CIBIL score may boost your likelihood of getting approved for loans. But the lender won’t view you as a reputable borrower if you don’t include all the necessary documentation with the loan application form. As a result, there is a lower likelihood that your loan request will be granted.
Maintain sufficient collateral
Typically, banks would need collateral (nearly equal to the loan amount) when you approach them to borrow a large sum of money, such as for home loans, business loans, student loans, and so forth. Given the minimal risk and secured loan payback, borrowers with sufficient collateral will receive loans with better repayment terms and cheaper interest rates. Loans become non-performing assets when borrowers cease making payments and default for 4 to 5 consecutive months (NPA). In this situation, the lender would take the borrower’s collateral and utilise it as payment for losses.
Compare Lenders
Several banks and NBFCs are currently offering loans in the market at competitive interest rates. It’s best to conduct some market research and obtain loan quotes from a range of lenders before choosing your lender. Examine the processing costs, interest rates, terms and conditions, and other costs each lender is willing to offer. Choose the option that offers the best bargain based on your demands and requirements in the end. It is recommended to go to a bank if you are thinking about taking out a loan for the first time or if you have no history with credit cards. This is so because banks need less paperwork to process unsecured loans than do private lenders.
Make sure you are aware of your financial situation before submitting a loan application. Before submitting the loan application form, check your credit score, determine your debt to income ratio, gather all the necessary information, and make sure your application is complete and satisfies all the requirements. Never forget to contrast different loan offers from banks and NBFCs and choose the one that best meets your needs.
