Applying For a Personal Loan? Avoid These Four Common Oversights
March 19, 2023

A Personal Loan is funding provided for fulfilling individual needs, whether for emergencies, mandatory or lifestyle requirements finance should be available when needed, not when the crisis or celebration is over.

A Personal Loan is touted as one of the fastest and most convenient methods of securing funds, making this fact a reality for you possible if your application is processed without any delays.

Personal Loan providers have streamlined the process of dispersing funds to applicants hassle-free within the shortest time frame precautions taken from the applicant’s end by taking note of the following will ensure quick receipt of funds.

Check Out a Suitable Lender:

It would seem logical that the Bank with which you have an account will sanction the amount required as a Personal Loan quite readily this is true to some extent, as the Bank handling your money should be the preferred lender.

But having an account may not be sufficient to sanction a Personal Loan, and having a Bank account in the designated Bank is not mandatory to process a Personal Loan.

Though weight age is given to the existing relationship Banks will differ as per the policy norms for issuing a personal loan; checking the criteria before applying will ensure the smooth processing of the application.

Significant Policy Norms Include:

  • The company the applicant is currently working with should be approved per the lender’s sourcing norms. The Company List published by the Bank will include details of employers and their categorization. Eligibility for loan amount will be calculated per the company grade and if the company is not listed, the request can be declined.
  • The net salary transferred to the Bank should exceed the minimum required benchmark. The minimum income criteria are not standard across all Lenders it ranges from 20k per month to 30 k transferred to the Bank monthly.
  • It is mandatory for applicants to have a CIBIL or credit history of more than 12 months for processing a Personal Loan with some Banks such as Axis bank, Bajaj Finance, Standard Chartered and Fullerton India ltd. On the other hand, HDFC Bank, ICICI Bank, Yes Bank, Axis Bank and Kotak Bank entertain first-time loan seekers without a CIBIL Score.

Banking History

The balance in your account is a witness to your financial dealings; a healthy bank account is one in which sufficient balance is maintained at all times to cover all expenses. Therefore, an applicant’s bank account is studied closely and significantly approves a loan.

Regularity of salary credits and income from other sources, such as rent or interest, should reflect in the account. EMI for existing loans must be cleared timely and the average bank balance for three months should be sufficient to repay the installment of the loan amount applied.

Bouncing an EMI or a cheque returned unpaid is regarded as a default if any such transaction is seen in the last three months banking history the request for the Personal Loan is denied.

Any new credit taken recently loan amount credited in the last three months is reflected in the Bank account is an alert for further sanction.Before sanctioning a new loan amount the lender will like to assess the applicant’s repayment capacity.

A judicious balance of savings and expenditures would be ideal for giving a favorable report. Therefore, taking stock of the Banking details as the above is in order before applying for a Personal Loan will enable a smooth process.

Check Your Eligibility For a Loan

It is wise to know beforehand the loan amount that can be sanctioned to you or what amount you can get. The requirement for funds could be in excess, but the loan amount will be approved according to the eligibility calculation.

The CIBIL Score should be above the required benchmark of 720 points or more if the CIBIL Score has been downgraded due to delayed payments, it is prudent to wait and rectify it.

Your current income and the outgoings, including the mandatory expenses and EMI being paid for existing loans. If the total EMI being paid exceeds the maximum amount an applicant can pay, there is no room to apply for another loan. Check with www.yourloanadvisors.com for methods to lower your obligations and create eligibility if additional funds are required.

5% of credit card dues outstanding will be added to the monthly obligations. Therefore, if the spending on credit cards has been high, it is better to clear the dues before processing a loan request.

Residential and Employment Stability.

The Personal Loan being unsecured credit, the lender will ensure the applicant is well placed to repay the loan timely and is easily contactable. Therefore, physical verification will be conducted at the residence and office premises per the documentary proof submitted.

A self-owned or family residence is an advantage an enhanced loan amount,if required, is sanctioned as rent expenses are saved and inspire confidence that the applicant can be reached.

Bachelors living in rented accommodation must provide adequate proof of residence, verification is conducted closely and the landlord can be required to authenticate.

So if the rented accommodation is recent, ensure the landlord and neighbours are known so they can respond positively to inquiries. A negative verification result can lead to the decline of the request.

A stable job with a regular income is essential to sustain and maintain living expenses. Therefore, a Personal Loan applicant with a history of continued successful employment and prospects is a likely candidate, whereas a break in work is viewed with apprehension.

Three months or more job continuity with the current employer and regular salary credits are the bywords for Personal Loan approval.

In Conclusion:

A Personal Loan is a policy-bound product per the lender criteria the process steps are clearly defined and streamlined to hasten delivery. Any miscommunication or default can delay the request.

The final decision for approval is in the hands of the Banks Underwriter therefore, the applicant’s profile must be clearly defined to inspire confidence and prove the customer’s eligibility.

The pointers given above have been experienced over our years of servicing loans. For example, we have known eligible applications to have been delayed or declined due to minor errors in documentation and lack of clarity in communication.

We hope this will aid personal loan seekers in successfully processing their loan requests and receiving funds timely.


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