Checklist Before Applying for a Personal Loan

21 Sep 2021 6 min read
Personal Loan: Checklist Before Applying for a Personal Loan - Afinoz

Are you considering consolidating your credit card debt, cover unexpected medical bills, or fulfill personal events such as a wedding? Well, then a Personal Loan can amazingly facilitate you. They are typically unsecured in nature, yet, they must be chosen wisely to not end up with a debt trap. 

Thereby, below we have stated all the essential things in our gradual checklist that will help you get the best Personal Loan, choose the best bank in India, and get instant approval. Let’s take a look at them without any further delay! 

Preparation for Applying for a Personal Loan 

Following are the things that you must consider to be able to choose the best Personal Loan for you: 

  • Analyze your monthly loan payments 

Personal Loan EMI Calculator can facilitate you in calculating monthly payments and the total interest you can have to pay over the lifetime of a loan. 

  • Decide what size of a loan payment you can afford 

Review your budget to determine what amount you can afford to pay monthly. 

  • You can reduce monthly payments by getting a longer-term loan, but you can pay more in interest over time. 
  • You can save on interest by opting for the shortest-term loan with payments you can afford. 
  • Decide how much funds you require 

Try to not borrow the amount that you wish to since you will be on the hook for the whole amount whether you employ it all or not. 

  • Review your credit report 

Negative spots such as bankruptcy, collection accounts, and late payments could turn it harder to get a Personal Loan. If you think any of the details on your credit report is wrong, the dispute can be carried out with an acceptable agency. Even eliminating one incorrectly reported late payment could facilitate your score. 

  • Evaluate your DTI 

Your debt-to-income ratio (DTI) states what amount of debt you're carrying relative to your income. The lower your DTI ratio, the more appealing you'll be for the lenders. 

  • To compute your DTI ratio, divide your total recurring monthly debt (credit cards, mortgage, auto loan, student loan, etc.) by your gross monthly income prior to adding taxes and withholding. 
  • Lenders prioritize a DTI of 36% or less but may sanction borrowers with greater ratios. If your DTI is just so upper, pay down a number of your debt prior to applying for a Personal Loan. 
  • Perform study across personal loan interest rates 

The interest you will have to pay on a Personal Loan is signified as an APR (annual percentage rate) and comprises fees and other costs. Usually, lenders publish their present APRs as a variety, like 5.99% p.a. - 18.25% p.a. 

  • Check your credit score 

If your CIBIL Score is 70 or higher, you can choose between more lenders and acquire better loan terms and lower interest rates. If your credit score is low, take steps to improve it swiftly: 

  • Do not consider applying for other new credit. 
  • Repay credit card balances. 
  • Pay any of the past-due amounts and make all the payments timely. 

If you think, you can’t enhance your credit score quickly and wish to get the loan instantly, consider getting a co-signer (if the lender allows you for the same). 

Decide on The Best Lender to Apply for a Personal Loan 

Take the following things into consideration to perform so as to avail of the best Personal Loan from the best bank in India: 

  • Hover around 

Every lender considers factors like your income, credit score, and credit history differently. Comparing multiple loan offers will assist you to get the simplest loan. 

  • Begin with your current bank 

As an existing customer, you can recover loan terms from your bank than you'd elsewhere. you can also research Personal Loan offers from other banks. 

  • Seek credit unions 

Credit unions may offer additional soft loan terms than traditional bank moneylenders. Nevertheless, you must be a member of a particular credit union so as to apply for a Personal Loan from a certain lender, which usually engages in opening a deposit account. 

  • Research modern lenders 

By modern lenders, we mean online lenders. They offer easier applications, faster approvals and extra flexible qualification requirements. 

You can take the help of the Afinoz instant loan app to get loan offers from several online lenders since Afinoz holds the hands of over 25 leading moneylenders in India. Here are some of the online lenders and marketplaces that you can consider applying for an instant loan: 

  1. Afinoz – Rs. 1 lakh to Rs. 50 lakhs. 
  2. MoneyTap – Rs. 3,000 to Rs. 5 lakhs. 
  3. PaySense – Rs. 5,000 to Rs. 5 lakhs. 
  4. Dhani – Rs. 1,000 to Rs. 15 lakhs. 
  5. KreditBee – Rs. 1,000 to Rs. 1 lakh. 
  6. NIRA – Rs. 3,000 to Rs. 1 lakh. 
  7. CASHe – Rs. 5,000 to Rs. 2 lakhs. 
  8. Capital First – Rs. 1 lakh to Rs. 25 lakhs. 
  9. Credy – Rs. 10,000 to Rs. 1 lakh. 
  • Compare loan terms from different lenders 

Get the subsequent small prints for every lender, you assess: 

  • End-use limitations 
  • Fees and penalties 
  • Discounts or special offers 
  • Type and range of interest rate 
  • Estimated monthly payment amount 
  • Loan term range 
  • Approval and disbursal duration 

Some lenders offer pre-approval for Personal Loans. So, check your messages or emails if you’ve got any pre-approved Personal Loan offers as you can get more appealing deals on the same. 

  • Decide on the lender 

As per your study, opt for multiple lenders that seem appealing. Applying for a Personal Loan can uplift a tough inquiry on your credit report and so many hard inquiries may reduce your credit score, but hard inquiries for the same sort of credit within a brief time are typically considered one hard inquiry. 

Apply for Personal Loan 

Once, you have finalized which is the best lender in India for you. The next step is to apply for Personal Loan. In the majority of cases, you can apply for a Personal Loan online today. Just bear in mind that you have to be ready with: 

  • Your basic identification information. 
  • The demanded documents at hand. 

Know-How a Personal Loan Affects Your Credit Score 

Once you have applied for a Personal Loan, an eventual element on the checklist is to have the knowledge of the elements that affect your credit score since it will only help you in case you need additional or any other loan potentially. 

So, making timely and full loan payments until your loan is repaid can uplift your credit score. Although, delaying or defaulting on a payment can lower your credit score. Other things that can affect your credit score are the following: 

  • Credit Mix 
  • Credit utilization 
  • Credit history 

Therefore, consider keeping an eye out on your credit management via your credit reports that you can get from the Credit Unions. 

The Takeaway 

To wrap up, Personal Loan is an ideal choice to consider in times of emergencies as they can be used for multiple purposes alongside they can avail without pledging any collateral. Yet, borrowing has never been a good thing since you owe the accountability to pay back the amount you take. 

Moreover, there are multiple lenders in the market but Afinoz being the best provides the best Personal Loan deals as it has a partnership with 25+ lenders. To grab the best deal, you can download the respective instant loan app from the Play Store

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