The pandemic has hit the nation hard, where it hurts the most, in the pockets. This is quite evident based on a recent survey conducted by the Economic Times on the impact of COVID-19. The survey reports that roughly 39% of the 3,074 respondents said that are facing a salary cut in their current jobs1.
Hence, at this moment, a personal loan definitely qualifies as a pay-off boon than as a bane of liability. The amount borrowed using a personal loan can be utilized to fulfil financial obligations like education fees, restocking of business inventory or even medical expenses. A personal loan
will not only help you traverse your current financial crisis but, also help build your credit score, provided you repay your instalments on time.
However, mistakes do happen and in case of personal loans, the biggest mistake one can make biting off more than you can chew. I.e. taking a significant amount without having the means to pay it off. This can lead to a disastrous credit score and eventually, a huge financial backlog for you in the long-term. Not only this, it also reduces your chances of getting a personal loan or any loan for that matter in the future when you may require it.
So, how to ensure this doesn’t happen and that your personal loan application does not get rejected? Here’s how.
Step 1: Assess your requirement
The first and most essential step is to assess your requirements accurately. While this may sound easy, it can actually be the most difficult part of your personal loan journey. The loan amount should be enough to fulfil its end goal and at the same time, easy to service based on your cash flows. Ensure that the loan amount is enough to avoid any need to borrow again, as the same significantly affects your credit score.
Step 2: Find out your credit score
The eligibility for a personal loan and the interest rate that will be charged depends on your credit score. If you have borrowed money at any time, by using a credit card or any other form of loan, then you are likely to have a credit score. At times, a credit score may have errors, which may explain the low rating. It is highly recommended to check your score regularly for such errors and bring it to the notice of the credit bureau to rectify it. With the Finserv MARKETS app, checking your credit score is now more convenient than ever! All you have to do is download the app, register and claim your free Financial Health Check Report (FHCR)!
Step 3: Find out the costs involved
Many loan agreements have hidden costs that are often visible only after the loan is approved and disbursed. Aside from interest costs, a personal loan also includes other charges such as processing fee, foreclosure fee i.e. if you want to pre-pay / foreclose your loan, late payment fee, taxes and other charges etc. It is best to note down all the charges and costs that will be incurred, and then compare it with that of other lenders.
Step 4: Check the fine print
Whether you are getting your personal loan via an agent or applying it yourself, make sure you read the fine print. Many a times, there are details hidden in plain sight that you need to be cognizant of, yet you may overlook in the hurry to get the loan approved. Getting the funds is easy, applying for it and getting it approved is the trick. Make sure you read every instruction / terms & conditions carefully and fill the forms duly, to avoid the chances of getting your application rejected.
Step 5: View pre-approved offers
It is likely that a financial institution already has a pre-approved loan waiting for you. Borrowers can find these offers on the website of a bank or a Non-Banking Financial Company (NBFC), or contact their sales team to find out the details.
Step 6: Look for ease of application and disbursal
A good lender should have a secure profile and an easy, preferably online way of processing things. Easy application, approval and disbursal ensure a hassle-free experience for the consumer.
Take the example of applying for a Bajaj Finserv Personal Loan
available on Finserv MARKETS, which has a robust, contactless and an easy to use personal loan application process. All you have to do is:
Fill out an online personal loan application form and provide your personal, employment and financial details.
Select the loan amount and tenure as per your needs to get instant online loan approval.
Submit the required documents online for verification and validation
That’s it! Once approved, your loan amount will be disbursed to your bank within just 24 hours!
During 2017-18, the Reserve Bank of India came up with an interesting statistic. According to them, personal loans, education loans, and home loans comprised of nearly 96 percent2 of the incremental non-food credit, with personal loans accounting for a whopping incremental growth of 41.6 per cent and 41.5 per cent for the financial years 2017 and 2016, respectively.
This implies that personal loans are increasingly becoming the go-to solution for emergent financial needs. This helps, especially in the current scenario where people are facing salary cuts. Hence, for a successful and quicker application, it is extremely necessary for you as a borrower to follow the aforementioned steps and take a loan only as per your requirement and repayment capability. Choose a loan provider, which is flexible and accessible. For instance, Finserv MARKETS has plans and products (such as the Hybrid Flexi Loan) that offer up to 45 percent lower EMIs and flexible repayment tenures. Moreover, there are no hidden charges involved. On top of this, being a complete online and contactless solution, your loan application can be approved within as low as 3 minutes! This definitely checks off most of the criteria.
Personal loans are a way to shed your liability, and they can, only if you are aware enough to use them as a means to share the load and not create one.