A personal loan is an unsecured loan, given for diverse short-term purposes, and is mostly taken by professionals and self-employed borrowers. Personal loans are common and popular loan products in India and have become even more widespread amongst youngsters who are already working or running their startups/businesses. A Times of India report states that young adults, who are less than 25 years old, are driving the growth of the personal loan space. In fact, they are taking lower-value and short-term loans and this percentage has increased 2.3 times in terms of value between FY17-21. At the same time, volumes (by disbursals) have also gone up by a whopping 3.8 times.
Young India likes quick and easy personal loans to meet varied requirements, ranging from home renovation and repairs to buying two wheelers, meeting costs of higher education, travel costs, wedding expenses, and even medical emergencies. In fact, these loans also help them learn to responsibly manage credit, build up their credit scores and histories, while also helping them achieve goals, fulfill aspirations, or simply take care of pressing needs without having to empty out their savings. However, in this context, it should be mentioned that personal loan eligibility plays a vital role. Many youngsters often find it hard to obtain personal loans due to the stringent eligibility criteria. Personal loans are anyway unsecured, i.e. they are not secured by any specific guarantee or asset/collateral. Hence, they have certain criteria that are non-negotiable, while coming with slightly higher rates of interest as compared to secured loans like home loans or car loans, for instance.
Increasing your personal loan eligibility- Handy Pointers
What can borrowers do to increase their loan eligibility and successfully obtain personal loans? Here are three steps that you can always follow:
Check your credit report- Your credit report (as provided by credit bureau) will be accessed and examined by your lender while verifying your loan application. This report contains all relevant information about your debts, repayment, defaults, cheque bounces, and so on. You can improve your loan eligibility by ensuring that you check your credit report before applying. Sounds strange? Often it happens that credit reports contain several inconsistencies and inaccurate information which may otherwise hamper your loan application. Hence, checking the report beforehand will help you identify the same and write to the credit bureau for getting them removed. This will naturally scale up your loan eligibility. You can check your credit score easily on the LazyPay website or the LazyPay app.
Enhance your credit score- You can also enhance your loan eligibility by increasing your credit score before you apply. Since personal loans are unsecured, lenders give a lot of importance to credit scores. Your credit score reflects your overall creditworthiness and your ability to manage and repay debt. It is a very important parameter for most lenders. A credit score between 750 to 900 is ideal for getting your loan sanctioned swiftly. Always check your score before applying. If it is lower than 750, take some time and productive steps to improve it before submitting your loan application. You can maintain a good credit score by paying your loans, credit card dues, EMIs and other dues in a timely manner without any defaults or forgetting about the repayment dates. Pay your utility bills on time as well.
- Reduce your overall debt- If you have a higher debt to income ratio, then the lender may refuse to sanction your personal loan. What is debt to income ratio? This is the proportion of your total debt in relation to your overall income. This should not exceed 20-30% if you are applying for a personal loan anytime soon. Try and clear up credit card dues and other debts before applying. This will send a favorable signal to the lender that you are interested in swiftly becoming debt-free.
These are the steps that can help you greatly enhance your loan eligibility for a personal loan. You should also choose a tenure that you are comfortable with, while trying to increase your savings at the same time. A relatively sound financial position with a good credit record will convince lenders that you can handle the loan without any difficulties.
You can try applying at LazyPay XPress Cash for a quick and hassle-free personal loan. You only have to verify your mobile number and fill out a simple form to check your eligibility. This will have your personal details, PAN card number, income details and the nature of your employment. Once you consent to credit and other checks, LazyPay will inform you about the amount that you are eligible for. You can then complete the process in quick time, before getting your approved credit limit. You can withdraw money from this limit to meet your needs. You will only pay interest upon the amount that you borrow, and not on the entire amount. Getting a personal loan from LazyPay is comparatively easier than most other conventional methods. It is possibly the swiftest way of getting a loan online, as you can get a personal loan upto Rs. 5 Lakh, disbursed in under five minutes. In addition to this, the entire process is fully digital and a paperless one. Try it today and take care of your financial requirements with aplomb.