Things to do before you apply for a Loan

 Things to do before you apply for a Loan

Loans are your saviours during financial emergencies. They provide you with the requisite funds to ease the load and burden. Availing a loan is now easier than ever with various lenders offering different versions of loans like a home loan, car loan or even the personal loans at a competitive interest rate and longer loan tenures. It is important to abreast self with some key pointers before you apply for a loan.

The lending market is highly competitive at the moment. Lenders often attract the borrowers by using catchy deals like unsecured loans, low-interest rate, instant approval etc. But it is wise and smart to be thorough with the basics before you plunge on a lender. Comparing different lenders over the LoansJagat platform enables you to choose the best loan with the right knowledge of key parameters like interest rates, loan amount, loan tenure and other terms and conditions. Online personal loans in India are easily accessible. One can apply for a home loan or other loans directly through the LoansJagat portal and get fast processing and approval. But before you get yourself a loan, here are some points which one should keep in mind.

  • Create a Strong Credit Score

Each and every lender considers your credit score before approving your loan application. It is imperative to work towards strengthening the credit score as it signifies your creditworthiness. The credit score is indeed a reflection of your loan repayment capability, previous and ongoing debt history. In order to evaluate the creditworthiness, lenders look at Credit or the CIBIL score to know whether you are sufficient enough to pay back the loan. A credit score over 700 is considered good, the higher the credit score, the better the probability of getting your loan approved from the lender. Defaults in the payments have a negative impact on the credit score, thus one must be diligent to pay the EMIs on time.

  • Compare Interest Rates

Lenders offer different rate of interests based on their fund rates and customer profile. One should always compare the key parameters like the interest rates, processing fee, tenure and other parameters. The interest rate structures are of two types- fixed and floating. The fixed rate of interest remains the same for the entire loan tenure whereas the floating rate of interest varies as per the RBI’s benchmark rate. With a good credit score, one can negotiate with the lender for better interest rate deals.

  •  Provide the correct information

Lenders seek some information and documents related to the borrower. It is very important to share the correct information with the lender as in case of false information, the chances of your application getting rejected increases. The lender validates the documents before approving the loan application. The borrower is required to submit some documents like income proof, age proof, employment proof, bank statements and address proof. It is thus advisable to keep all the documents handy for the quick loan application process.

  • Keep your KYC documents ready

KYC or ‘Know your customer’ is the basic requirement which every lender seeks from the borrower. As per the RBI guidelines, it is mandatory to get the KYC of each and every borrower so as to be assured that the services offered by a lender are not used by an entity with bad intentions. One got to submit the PAN card and any identity and address proof like. Aadhar card, Voter ID, Driving License and Passport. The KYC should be updated from time to time. Based upon these, the lender decides on the loan amount, loan tenure, interest rate and EMI.

One important thing is to be prepared for repaying back the loan on time. A loan is a commitment between the lender and the borrower. To keep the things smooth, one must comply with the lender’s eligibility criteria, terms and conditions and requirements. Also paying the monthly instalment on time should be the top priority as it could otherwise hamper your credit score badly and you may not get any loan in future. Whether you put any asset as security against the loan or not, it is important to be disciplined with the repayments as defaults can result in losing your property to the lender. Take your loans seriously and work towards building a great relationship with the lender.

Dorothy Moore