Personal Loan is a form of debt which can help you manage sudden expenses or unexpected emergencies. Since Personal Loans do not necessarily require you to pledge any collateral against the borrowed sum, the banks prefer to extend loans to people with a steady and fixed source of income. If you have experienced the process for Personal Loan earlier, you would know the level of documentation generally required by banks and other factors considered while sanctioning a Personal Loan.
Documentation helps establish your identity, stability, and credit-worthiness. KYC documents are demanded from a borrower as a proof of their Identity and address. Bank statements and salary slips help determine one's financial capabilities and spending habits. Although this gives them a fair idea of how much you can spare for EMIs against your proposed Personal Loan, the amount of time consumed can be a big deterrent for a first time applicant who is looking for a loan on an urgent basis.
Eligibility Criteria That Banks/Financial institutions consider while extending a Personal Loan
So, what exactly do the banks look for in a Personal Loan applicant? How do they decide whether to process a particular application or not? Which elements increase the probability of you getting a loan?
Credit Score: A healthy credit score reflects that you have serviced all your past loans much within the due date. Any default or late payments will affect the credit rating negatively and reduce your chances of getting a loan. Banks and Financial institutions access your credit reports through credit bureaus like CIBIL, Equifax, CRIF etc.
Source of income: Since Personal loan is unsecured in nature, banks want to assess whether you will make timely payments against the borrowed amount. They prefer that you have a steady source of income and hence ask for salary slips and bank statements to verify the same.
Job Certainty: Not only your income but also your work history affects your chances of getting a Personal Loan. Frequent job changes or unstable employment conditions impact the eligibility of any borrower.
Residential stability: Banks may not prefer customers who change their residences very frequently. A stable address has a favourable impact on your loan eligibility.
A Personal Loan is the best option when you need funds without denting your savings. But the time consuming and lengthy processes make it less desirable to apply for loans from regular institutions. Then, what is the alternative to bank loans? Today, personal loans are available online in less than no time with limited documents and procedure. They have acquired the name of Instant Personal loan; because of the easy accessibility and availability of these credit products.
Why should you opt for an Instant loan online ?
Quick processing: A simple online application followed by a visit by an official to collect documents is all that is required to avail an instant personal loan. The Loan process from application to disbursal stage does not take more than 24-36 working hours if the documents are found to be sufficient and correct.
Know your eligibility upfront: New age lenders use AI to calculate one’s eligibility upfront even before one has applied for a loan. Every hard enquiry made by banks would reduce your credit score. Most of these lenders allow you to check your credit score online for free.
No foreclosure charges: Unlike a traditional bank loan, Instant personal loans come with the feature of prepayment or part-payments after 6 months of servicing the loan, without any additional charges.
Thus, Instant personal loans are the new favorite of the young working professionals today. The easy access, flexible repayment options and hassle free processes makes this personal loan most favourable.
