A personal loan is an unsecured payment form in which a lender’s assessment to pay back the hefty amount is essential. The borrower has to provide a guarantee about the repayment. If you are planning to get a loan from a bank, you must be confident about your financial ability to pay back the full amount within the committed time.
Make a solid financial plan that determines your credibility before reaching out to a bank institution and getting quick loan approval. Here’s a list of important factors that you must check before filing for a loan application
Inspect your credit score
Once you have decided to apply for a loan, you must know the importance of your credit score as it will help the lenders to gain trust in you by checking your recent credit report. You must ensure a clean credit history and no repayment defaults. To get instant loan approval, you must have a higher credit score. You must also check if you have any missed EMI, as it can blacklist you from getting loan approval.
Maintain a regular income source
It is important to reveal a regular and reliable income source to the lenders for getting loan approval. This is one factor that helps lenders to assess your creditworthiness. It would be best if you had a strong job profile with a high yielding income source for applying for a personal loan. You get a loan approval based on your work experience, job profile, and steady income.
Inquire about loans against collateral
Based on the price value of the asset (whether movable or immovable) can get your loan sanctioned. The thumb rule is the higher the value of an asset, the more credit you receive. You can use any high-value asset like land, house, vehicle, inventory, gold, and art valuables to get a loan sanctioned. In some cases, you can get a loan against collateral security.
Assess repayment methods
Before applying for a loan, evaluating your ability to pay the loan amount personally is essential. Make a rough estimate about the monthly EMIs in advance and plan accordingly. Once you know the amount you will have to shell out every month, you will be in a good position to decide if you will be able to manage the funds for repayment or not.
Compare the rate of interests
Before applying for a loan, you must have the right information about the current interest rate charged by different financial institutions. Based on this information, you can decide the loan amount that you can easily repay. A market study about interest rates is essential as this information will prevent you from falling for false bank schemes.
Deciding the loan term
A loan term can be short or long, depending on the amount of EMI or installments you can afford to pay five or ten years later. To decide the loan term, you must assess your financial position in the future. You must know your capacity to pay back the loan amount even if the circumstances do not favor you in the future.
