A Checklist: Note the following to expedite your Personal Loan journey.

Getting a personal loan has become a prerequisite to fulfilling an individual financial need Banks and NBFCs offer attractive terms to gain customers that best meet their eligibility criteria.

Gone are the days when getting funds was a long and drawn-out affair Digitalisation has hastened processes, and financers now have the experience and devised methods to eliminate unnecessary delays.

To get funds in time, there is much that an applicant can ensure before applying. A well-planned and researched application with a know-how of the Bank’s criteria will help make the journey successful.

An applicant should be aware before Applying for a Personal Loan if the lenders’ terms are suitable. Below is a checklist that an applicant can take note of to receive funds as desired via a Personal loan.

Does your current employer feature in the Company category list of the Bank?

The primary check is to confirm if your employer features in the Approved list of companies for sourcing a Personal loan.

Your Personal Loan Application is prioritised according to the category of the employer in the Company Category List of the Bank. Individuals working with top companies have a stable income to honour their timely repayment of all credit. They can quickly get approval with an enhanced loan amount and suitable terms.

Your company could be listed in Category A of one lender, whereas another Bank may classify your employer as Category C. However, if the employer is not listed, the response to the application may not be favourable.

Some lenders, like the ICICI Bank, also provide loans to employees of non-listed companies. Checking if your company is included in the company category list is necessary to ensure that the Bank processes your loan application.

Is your CIBIL score above the required benchmark?

The CIBIL (Credit Bureau of India Ltd) assimilates all credit transactions reported by Banks and Financial institutions and issues a rating per the credit behaviour of an individual. Funds granted as Personal loans are without any security; financiers refer to the CIBIL to give loans to customers who manage their credit well and repay their EMI on time.

A score of 720 points and above is the benchmark most Banks require to issue a Personal Loan. Check your CIBIL Score before submitting your Application for a Personal Loan to know your status. An oversight on repayment or an error in your CIBIL report can also lead to a downgrading of your score.

If your score is below the required benchmark or there are aberrations in the history, the lender will be apprehensive about granting your loan request. Further, every time you apply and an enquiry is sent to CIBIL, your score gets deducted by 10 to 15 points, leading to further damage.

If you are a first-time borrower and do not have a CIBIL rating, apply for a Personal loan from a lender that processes requests from applicants with no credit history, such as HDFC Bank and ICICI Bank.

Are you eligible for the loan amount you need?

You can apply for the loan amount required, but the bank will issue the amount you are eligible for per the bank’s criteria. Each lender has their own standards, though they broadly remain similar for most lenders.

High-income applicants and individuals working in the Category A or B listed companies of the banks are given loan amounts applied for if their credit score is healthy. In contrast, if you work for a non-listed company and do not have a CIBIL history, banks may be apprehensive about giving you the loan amount you need.

Apply to a Bank with which you have a previous relationship, such as a salary account, or start by initiating a credit score by applying for a lesser amount.

Make a note of all your existing obligations.

If you need funds and are looking to Apply for a Personal Loan, evaluate your finances before applying. What is the monthly income you receive that is tabulated and credited to your account versus the EMI you pay?

The Banks calculate Eligibility for a Personal Loan considering that the applicant should easily afford the monthly living expenses after paying the EMI and credit dues. The total of the current EMI and 5% of credit card dues should not exceed the income ratio reserved for mandatory expenses.

If the EMI running over the income before applying for a further amount, you can do the following to enhance your eligibility and create room to pay an extra EMI:

• Clear existing credit card bills any balance dues will be added to the obligations.
• If you have any consumer loans with a minimum balance, repay the amount to close the loan.
• Apply for a top-up on the existing loan rather than a parallel loan, as with a top-up, the amount repaid on the existing loan is reimbursed as a Top-Up.
• Consolidate existing Personal Loans with a Balance transfer and apply for the additional amount needed as a top-up with the Balance transfer.

Take action before applying for the loan otherwise, the request can be denied because the applicant is declared as overleveraged.

Check if the documents required to process your loan are in order.

A Personal Loan, being unsecured in nature, is processed based on designated documents. The documents you submit to process your personal loan request represent your professional and personal profile.

Income documents include:

Three months’ Bank statement of your salary account that depicts your financial health. Your Bank statement must reflect the following;

• A regular salary credit on a corresponding date for the past three months.
• Sufficient Bank balance on average to afford an extra instalment.
• No bounces or cheque returns in the Banking history.

The salary slips for the last three months must reflect:

• The name of your employer and your credentials.
• A salary break-up with a column for deductions.
• The net amount should match the Bank credits

KYC documents include:

Your PAN card, Aadhaar card or an alternate approved identification and address proof. These documents are mandatory and must be readily available when submitting an application.

Points to note when submitting documents are:

• The photograph of the applicant must be clear.
• All documents submitted must be valid and legible.
• The current address with the landmark on the document is required to conduct a physical verification.
• The Name should match exactly as mentioned in all manuscripts submitted. (For example, if your Aadhaar card reflects your name as Aditya. S. Chopra and your Bank statement mention your name as Aditya Chopra; the process will be stalled till an additional KYC document with a similar name is submitted).

Additional Documents required per the policy of the individual Bank include:

• Form-16 for the current year in case of
• a Private Ltd employer.
• Company ID card or appointment letter.

A one time submission of documents that have verified and self-attested by the applicant are the manta to receiving funds on time.

Consider the features of various Banks, which is the Bank offering you the most suitable terms.

Applying to numerous lenders simultaneously is not a favourable option as, besides hurting your CIBIL, it will make lenders wary about your intentions to take a loan from multiple Banks, which might not be easy to repay.

The foremost criterion for most customers when Applying for a Personal Loan is the lowest Interest rate. Though the cost of the loan is a priority, other features that can influence your choice of lender are as follows:

• If you need a maximum loan, check the bank that favours your profile and has a relationship with you.
• To repay your loan within a limited period, look for a lender with a manageable repayment policy.
• If the priority is a lower EMI, choose a Bank offering an extended repayment tenure.
• A Personal loan Top-up or a Balance transfer is the answer if the eligibility for the amount is not met.

Gaining knowledge beforehand and gathering information to make an informed decision is always beneficial calculate your EMI using our EMI Calculator to check which tenure suits you financially.

If you reside in the Delhi and NCR region, NOIDA, or Gurugram, contact us at www.yourloanadvisors.com to book a personalised visit from our advisor to help you apply to the lender with the desired terms.

Deciding to review the terms available may consume time and effort, but doing this exercise before Applying for a Personal Loan makes the journey satisfactory!