5 MinsJune 03, 2021
Anika Verma is an employee in a private firm. Her monthly salary is Rs 50,000. She needs Rs 3 lakh to tide over an emergency and wants to apply for a personal loan. She knows about the loan application process and that she can do it easily online.
However, she is not sure if her application would be approved. Let us see the factors that will ensure it.
Fix your credit score
Anika should first check her credit score because that's the first thing a lender will review. A good credit score is over 700. An ideal credit score is 800+. Since Anika uses her credit card sparingly
and repays in full, she has no reasons to worry on this front. Also, she has no other loans at this point. Thanks to both these reasons her credit score is likely to be high. She can check her credit score with one of the credit bureaus to
be doubly sure, before applying for the loan.
But if, unlike Anika, you have other loans and are not regular with your credit card payments, your credit score may have taken a hit. Work on these before you apply for a new loan if you don’t want to risk your application getting rejected.
Anika must make sure that she can pay the EMI (equated monthly instalments) every month. Since she wants a loan of Rs 3 lakh, at an interest rate of 11% a year, her EMIs will be Rs 13,982 for 24 months.
If she can't afford this EMI, she can increase her tenure to 36 months. This will bring her EMI down to Rs 9,821 per month. However, the total amount of interest she pays over the entire loan tenure will go up. She can easily check her affordability
by using the Personal Loan EMI calculator, which is available online, before deciding.
Selecting the lender
It is advisable to go with the bank where Anika already has a banking relationship, maybe her salary account. She can save time for the KYC verification and thereby speed up the application process. It
will also help in speeding up the approval process. Hence, Anika should check with her bank before considering other lenders.
In addition to the interest rate, Anika also needs to consider the time taken for approval of the loan. She should also check if she has pre-qualified offers. If she does, such a loan may be available instantly, with minimum documentation or with
no documentation in some cases. Other factors she should consider include processing fees and pre-payment charges. These factors too have an impact on the overall cost of the loan.
[Also Read: 5 Things You Did Not Know About Personal Loan]
Lenders require a specific set of documents to process a loan. Anika must ensure these documents are ready to be submitted when required. She can check this list on the bank’s website or at the branch. Some
of these documents include identity proof, confirmation of employment, bank statements and salary slips. If documentation is in place, the loan disbursement may happen in less than 24 hours.
The fastest way Anika can get her personal loan is by applying online, either through her bank’s mobile app or website. All she would need to
do is to fill out the form, upload scanned versions of her required documents and enter the loan amount. Once the loan is approved, the disbursal process will begin, and she will be required to e-sign the loan agreement document.
Today, lenders prefer online applications as it reduces their work of collecting documents, etc. If it is your existing bank, an online application is even faster and may take less than a day to be approved. Besides, if it is a pre-qualified offer,
the money may be credited to your account in a few seconds.
Axis Bank’s 24x7 Personal Loans which are available online with minimum documentation is a good option for Anika. By following these handy tips,
she can get the loan in a few simple steps and meet her urgent needs.
Disclaimer: The Source, a Mumbai-based content creation and curation firm, has authored this article. Axis Bank does not influence the views of the author in any way. Axis Bank and The Source shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.