Everyone has faced financial instabilities or cash crunch in their life at times and thought of taking a loan to manage it. But before taking a loan it’s necessary to understand and assess its repercussions. The person or borrower should have clarity on the purpose of a loan that will further help you to decide the loan amount and tenure.
Today a lot of banks or NBFs offer quick and collateral-free loans with low-interest rates. But before you go ahead and apply for the personal loan, few factors should be kept in mind to make the loan process easy and seamless. Let’s refer the following points as online loan guides and understand them in detail:
Improvise your CIBIL or Credit Score
The credit score is the first and foremost thing that gets checked by every lender. A credit score is a number that represents the creditworthiness of the borrower based on his/her credit history. So the first step is to check your CIBIL or credit score.
A credit score helps the lenders to assess the repayment capability of the individual, i.e. probability of repaying the debts. The factors which are used to calculate credit score are the total debt owed, payment history, delays in repaying the EMIs, employment type & stability, types and tenure of other loans carried by the person.
Your credit score strength depends upon your credit utilization behavior and repayment capability where any default or delay in payments of EMI can negatively impact the credit score. Having a higher credit score means, you hold better chances of getting the loan approved. So before you apply for any loan it’s a good idea to work out on a plan that will strengthen your credit score.
Check Interest Rates
Interest rates that are offered by various banks or lenders are generally different. It is advisable to thoroughly check the instant loan guides on their websites where the details of every type of loan along with interest rates and terms & conditions are mentioned. This will ensure that you chose the best loan options as per your requirement.
It is also important for you to understand that rate of interest on personal loan depends on various factors like, lenders’ policy prospect, government policies, current inflation rate along with individual capacity factors such as employability, stability in the job, gender, age, loan amount, tenure, credit score or risk group, etc.
Generally, lenders adopt the risk-based approach that considers customer’s credit profile, financials, repayment capability, and prevailing market rates. Interest rates may be fixed or floating.
Be Truthful and Always Provide Correct Information
The most important step while applying for the personal loan is providing the correct information about yourself as it increases the probability of loan approval.
Banks or non-banking financial institutions need certain documents of the applicant such as income proof, bank statements, and address proof to evaluate or for checking the eligibility of the individual. These documents are used by the lender to assess the borrower’s debts or loan obligations, financial status, and most importantly to verify any fraudulent behavior. The bank statements are used to check your credit or debit pattern to weigh up your repayment capability.
All these details help the lender to conclude whether an applicant is eligible for the loan or not and there is no fraudulent activities are conducted using his/her details or address. Thus, you must provide every information to its correct state as it will benefit you only.
It’s Good To Be KYC Ready
Today KYC is very important in financial as well as non-financial institutions.
RBI i.e. Reserve Bank of India has made it mandatory for all the lenders to complete certain checks before lending money to the borrower. KYC i.e. Know Your Customer is the standard terminology used as a mandatory check-in in which customer identification is authenticated. This customer check process ensures that no service of the bank or non-banking financial institution is misused.
OVD i.ei Officially Valid Documents that are accepted by RBI for validating the customer proof of identity and address are Driving Licence, Passport, Voter Identity Card, Aadhaar number issued by UIDAI, a letter issued by the National Population Register containing the individual name and address details, NREGA Job Card. You can submit any one of these documents as proof of address and proof of identity. By any chance, if you don’t have the address updated on these documents you can submit other additional documents as listed by RBI and deemed under OVD.
KYC documents should be updated at regular intervals as it helps the financial institutions to do risk assessments. Thus, you must submit the required KYC documents to lending financial institutions for faster loan approval.
Once you are clear in the type, amount, and tenure of the loan that will help you to aid your financial commitments or obligations ensures you also have a plan for repayment too. This is referred to as Financial Prudence means you don’t make common mistakes which others make. So, it’s better to plan well and in advance with the help of instant loan guides!