As Personal loans are rapidly becoming an effective financial tool, many people are seeking them but are being rejected. If you’re a new customer looking to obtain your first Instant Personal loan in India, or you simply want to know why your applications keep getting rejected, you can’t miss out on four easy yet decisive factors outlined below that decide which way your application moves—approval or rejection. Let’s get started.
1. Maintain a healthy credit score
Maintaining a good CIBIL score is more important than ever. Those aren’t just three digits, but act as a financial report card that lenders carefully examine to measure default risks. A 750+ score determines—prompt approval with a lower interest rate, hassle-free procedure, & seamless borrowing experience. On the other hand, a score below 650 typically struggles to attract lenders, so much so that it gets disapproval straight away or approval with a higher interest rate and stricter terms.
How to boost your CIBIL:
1. Pay credit card bills & EMIs on time.
2. Keep your credit utilisation to 30% or below.
3. Always keep an eye on your credit report regularly for errors.
2. Check Your Eligibility Before Applying
Not going through the eligibility criteria before you apply for an instant personal loan in India is a common mistake. Consequently, it not only results in loan rejection but also takes a toll on your CIBIL score. Trusted RBI-approved Personal Loan apps offer online eligibility check tools that enable borrowers to determine whether they qualify for the loan before submitting a formal application. Although eligibility criteria vary by lender, let’s look at the common parameters used by banks & NBFCs to assess creditworthiness.
Age: Usually between 21 and 60 years, depending on the lender. For instance, SalaryOnTime, an RBI-registered NBFC, accepts applications from borrowers falling into the age bracket of 21 to 54.
Employment status: Salaried or self-employed. For instance, many Instant Personal Loan apps lend credible financial support only to salaried professionals. Nevertheless, many loan apps cater to the self-employed or both.
Monthly income: Minimum income requirement, depending on the lender. For instance, SOT requires you to have a minimum monthly salary of 30K to qualify for its personal loans.
Work experience: Stable employment history
City of residence: Tier-1 cities like Ahmedabad often have better loan accessibility due to high flexibility
3. Keep your Debt-to-Income Ratio in check
The Debt-to-Income Ratio depicts how much of your monthly salary is consumed to clear existing debts, such as credit card bills, EMIs, etc. More DTI means your hands are already tied to unavoidable expenses. Therefore, lenders prefer a DTI of 40% or less. It ensures you can manage loan EMIs or lump sum repayment seamlessly along with other obligations.
Ways to lower your DTI:
—Try to maximise your income. If not, try cutting back on unnecessary expenses.
—Try to repay credit card bills before you apply for an instant personal loan in India.
—Avoid taking multiple loans simultaneously. More than one repayment may feel overwhelming.
4. Borrow Only What You Actually Need
Since you’re looking to obtain your first Instant personal loan in India, you should always borrow exactly what is required. It may be tempting to procure the maximum loan amount you are eligible for; however, it may create unnecessary pressure from hefty EMIs. Therefore, try to obtain a small and manageable loan that fulfils your purpose.
For Example:
Let’s assume Rishav, a salaried professional in Ahmedabad, needs ₹35,000 to repair the leaking roof of his house before the monsoon season. Although he is eligible to procure a personal loan of up to ₹1 lakh, he makes a wise decision to borrow what is required. He obtains only ₹40,000.
By borrowing only the required amount, he keeps his EMI affordable and avoids unnecessary financial pressure in the coming months.
So, these are the four crucial pointers to keep in mind to get a smooth Instant personal loan in India. This will not only elevate your loan experience but also help you make the most of it for your personal self.