5 Points Not To Overlook Before Applying For A Personal Loan

Life is too short to delay your happiness. If an opportunity to celebrate an occasion or travel around the world comes, never miss a chance in fulfilling your dream with a personal loan.

This blog explains the 5 things you need to know while applying for a personal loan so that you can associate with the best lender and qualify for a personal loan with best interest rates.

• Maintain a good credit score - Your credit score is a three-digit number which represents your credit history. This score provides information on how punctual you are towards your credit repayments. The credit score ranges from 300-900, but the ideal credit score considered by many lenders is 750 and above. So, if you have a low/poor credit score, credit bureaus consider that you have a careless attitude towards your credit management and reject your application.

Hence, it is always advisable to maintain a good credit score by paying your dues on time. The best way to keep up a good score is by automating your debt payments.

• Conduct better research before finalizing on the lender - Today, it is easy to avail a personal loan from banks and NBFCs (non-banking financial companies) with attractive interest rates. While some of the interest rates are unbelievably low that they come with other hidden costs which will only result in an expensive loan with huge interest rates to repay.

Therefore, conduct better research on various lenders and check for their interest rates, loan tenure, prepayment penalty, processing fees, etc. and then finalize on the lender that suits your requirements. You can also check their foothold in the market by contacting any financial advisors or trusted agencies.

• Fixed obligation to income ratio (FOIR) - The proportion of your income being consumed in bill payments, loan EMIs and credit card payments determine your FOIR. To assess your repayment capacity, every lender verifies your FOIR. So, if you exceed more than 50% of your take-home salary, then your loan request will be rejected.
• Don’t apply for multiple loan applications - Do not let too many hard enquiries be conducted on your loan application as it may hamper your credit score. The more you apply for credit, the more your lenders will enquire about you. This may, in turn, depict you as ‘credit hungry’ which deteriorates your creditworthiness and will also lead to rejection of your application.

Protect your creditworthiness by conducting better research on your lender online and check for the various parameters they offer. This way, you will gain more idea of where to apply for a loan when in need.

• Bring stability to your career - You will be qualified for a loan based on your creditworthiness and the income that you are paid. Hence, the more you switch your jobs, the less stable you are, which results in hampering your creditworthiness.

So, if you want your application to be accepted on time, make sure that you are maintaining proper job stability. If not, your lender may consider you as a liability because of your ill-timing in repaying your EMIs and reject your loan application.

Taking out a personal loan is not difficult, but borrowing it in the right way should be correct, otherwise, you will be left with massive debts to repay. It is advisable to consider your financial obligations and repayment capacity before applying for a loan, as it can help you in applying for a loan amount which you can afford to repay.

If you are looking out for same-day approved loans, then apply with  FlexSalary. The main advantage of applying with FlexSalary is they approve you with the loan even when you have a low credit score as they consider other factors to approve. So, apply now!