First time borrowers may be sceptical about availing advances, courtesy the strict necessity of repayment. Also, pre-requisites of financial institutions may also discourage prospective borrowers from applying for a loan. Timely repayment is an essential factor to consider while availing a loan, and prior planning is thereby essential. Failing to repay in time may lead borrowers into a debt trap which they might find hard to recover from.
Instant personal loans offered by NBFCs can be an ideal solution for aspiring loan applicants. These are unsecured in nature and does not require you to provide any collateral. Such loans are sanctioned online in no time and requires you to meet certain basic eligibility parameters.
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Useful Tips to Remember for First-time Personal Loan Applicants
Mentioned below are some useful tips to follow for first-time loan applicants so that their applications are accepted easily by financial institutions.
- Hold a healthy credit score
Since a personal loan does not require any collateral, the lender faces a major risk if the applicant fails to repay the loan. Therefore, personal loan lenders are quite strict on the checking the applicant’s credit score and credit history.
Credit history comprises every credit-related information from your past. While assessing your credit history, if the lender finds any discrepancy including late payments, non-payment of dues, etc., your chances of getting the loan approval will reduce.
- Choose the right lender
The second most vital point you must consider before applying for a personal loan for the first time is to choose the right lender. When it comes to a personal loan, the terms and conditions and the rate of interest vary from lender to lender.
Therefore, it is necessary to do some thorough research and compare the loan offers from various lenders across the market. Moreover, you can take the help of third-party websites for comparing the offers before finalising a lender. Since you are applying for an instant personal loan for the first time, make sure you read every guideline thoroughly.
- Keep documents ready
Documentation or paperwork plays a vital role while applying for a personal loan. Generally, the amount of documentation involved in personal lo an approval is lesser than that of a home loan, loan against property, etc. All you need to do is visit your lender’s website, verify the essential documents such as KYC and income documents, and upload them accurately.
- Determine interest rate
Before you apply for a personal loan, do not forget to determine the interest rates. Since the rates change vary one lender to another, make sure that you do some quality research online before choosing your lender.
Remember that if you are choosing shorter repayment tenure, the total interest outgo will reduce. However, the interest amount will rise while opting for a longer repayment period. Before applying for an instant personal loan for the first time, use an EMI calculator and arrive at a comfortable tenure which will keep the EMIs affordable.
- Verify fees and charges
In addition to interest rates, another vital thing you must keep in mind is the processing fees and other associated charges of a personal loan. These extra charges may include administrative costs, foreclosure charges, prepayment charges, etc.
Make sure that you are completely aware of all such charges at the time of applying for this loan to avoid any hassle in the future. Remember that some lenders provide advances in the form of overdraft loans. Verify all charges in the same way when applying for such facilities as well.
Documents Required for a Personal Loan
Following is a list of documents you need before applying for an instant personal loan:
For self-employed persons
- Identity proof
- Address proof
- Proof of ownership on residence
- Income proof
- Office address proof
- Bank statement
- Proof of office ownership
- Business existence proof
- Proof of investment
For salaried persons
- Identity proof
- Address proof
- Income proof
- Proof of residence ownership
- Job continuity proof
- Proof of investment
How to Apply for a Personal Loan Online?
The steps to apply for a personal loan are as follows:
Step 1: Go through the terms and conditions
Step 2: Check interest rates and other charges
Step 3: Compute EMI using an online EMI calculator
Step 4: Fill out the online application form
Step 5: Upload the essential documents
Step 6: Wait for approval
Since you are borrowing an instant personal loan for the first time, be cautious about all the necessary terms and conditions. Take the help of multiple websites to get a better idea. Use an EMI calculator to know the amount which you can comfortably repay. Borrowers can also use an eligibility calculator to know the maximum loan amount they are eligible to get in the form of advances. Having all such details handy beforehand will reduce chances of rejections of your loan applications.
