Personal loan eligibility criteria differ based on the bank or financial institution offering the loan. However, applicants applying for instant personal loans can follow certain tips to increase their chances of eligibility. This article enlists five points that can help loan applicants better their chances of applying for personal loans.
5 ways in which you can improve your eligibility for a personal loan:
Here are five ways in which an applicant can improve their eligibility to avail instant personal loans.
- Figure out ways to increase your income: One of the best ways to increase your eligibility for quick personal loans is submitting proof of an increased income. Since personal loans are unsecured loans and do not require you to pledge collateral; proofs of a higher income assure the bank of your capability to repay your personal loan EMIs on time. You can demonstrate an increased monthly income by submitting proofs of income, incentives for good performance at work, and investment proofs.
- Maintain a low debt-to-income ratio: Banks consider your “debt-to-income” ratio while deciding whether or not to approve your personal loan application. A debt-to-income ratio is the ratio of your overall debt to your total income. For instance, if you earn an income of ₹ 1,00,000 monthly and your EMI repayments (monthly) amount to ₹ 65,000, your monthly debt-to-income ratio comes to 65%. This indicates that you have a higher monthly debt in comparison to your monthly income. If you already have loan repayments ongoing, you must focus on repaying them first to reduce your debt-to-income ratio before applying for an instant personal loan.
- Improve your credit score: Banks and financial institutions also consider your credit score before approving your personal loan application. A credit score is a three-digit number that ranges between 300 and 900, and a score above 750 is considered a good score. A higher credit score increases your chances of qualifying for an instant personal loan.
- Choose a longer personal loan tenure: You can also benefit by choosing a longer personal loan tenure. Doing so reduces the value of your monthly EMIs and makes the personal loan affordable. You can also opt for a higher personal loan amount by choosing a longer tenure. Using a personal loan calculator before applying for a personal loan can help you decide on the right loan amount.
A personal loan calculator is a free, online tool that you can use to know the value of your personal loan EMIs before applying for them. Using a personal loan calculator before applying for a personal loan can help you plan for your EMI repayments in advance.
- Avoid taking on more debt: While deciding on approving a personal loan, banks also check your credit report. If you have multiple ongoing loans, the chances of approval are lower. If you already have multiple ongoing loans, you must first focus on repaying them and then apply for an instant personal loan.
In conclusion, of the key things that you can do to improve your credit score, the following stand out:
- Increasing your monthly income
- Reducing your debt-to-income ratio
- Choosing a longer loan tenure
- Not applying for multiple loans at the same time
- Improving your credit score
If you are on the lookout for an instant personal loan to fulfil your short-term financial obligation or goal, opt for a bank that offers flexibility and competitive interest rates. In this regard, IndusInd Bank offers instant personal loans with a flexible tenure of 1-4 years and a loan amount ranging from ₹ 30,000 to ₹ 5 lakh. It follows a 100% paperless procedure to process personal loan applications, thereby making it more convenient for you to apply.
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