Loans are no longer seen as a last resort for purchasing the desired smartphone or a dream home. People have become less reluctant to apply for a loan, whether it’s for a personal, pickup truck, schooling, business, or home, in the last decade or so, especially if they don’t have a lump sum available.
loan approved in principle also assists that banks made it easy for the customer and potential borrowers to obtain loans by requiring less paperwork, performing quick eligibility cheques, and offering attractive interest rates.
Things to keep in mind while applying for a loan
They have launched an online application and document submission channel for the permitting process. If you are still intimidated by the loan application and review process, here is a list of seven factors in determining the approval of your submitting:
Credit history: Depending on your pattern of repaying previous loans, your credit history predicts your prospective repayment behaviour. It allows the bank to determine whether you will be punctual and consistent with your payments. Any previous defaults or delays are investigated; the longer the delay, the lower your score will be.
It won’t help if you don’t have a credit record because there is no basis for comparisons, such as no credit cards or loans taken out in the previous two years. Even so, you can avoid this by keeping a credit card with no repayment defaults. In general, a credit score of 700 to 800 is considered good. That means you’re more likely to be considered a safe candidate with a clean credit history free of repayment defaults. A credit score of less than 300, on the other hand, will increase the chances of your request being rejected. Credit bureaus, such as CIBIL, are a source of credit scores that financial institutions use to determine your creditworthiness.
Collateral: The leverage you provide to the bank when you apply for a loan may make getting a loan easier and faster. A high-value asset may result in more credit being sanctioned for your use because the loan amount is a percentage of the assessed value of the collateral. The asset could be movable or immovable (land or a house) . While personal loans (including credit card balances) are unsecured, approval for a loan to buy a car or a house, start a business, or study will not be granted unless adequate collateral is provided.