Applying for a loan is as easy as snapping your fingers in the digital age. Your smartphone lets you make purchases, transfer money between accounts, check your work emails, search for information, watch your favorite TV show on your commute to work, and more. It also allows you to borrow and repay personal loans through lending apps that offer funds for various purposes to salaried and self-employed customers.
You may have never borrowed a personal loan before, but now you feel that you need it for an urgent need. Consider the 4 factors to consider before applying for a ready fast:
#1 Your credit score.
The credit score is usually the first factor that each lending institution checks when receiving a loan application. Whether you are looking for a secured or unsecured loan, your credit score goes a long way in determining whether you can get the loan or not. Lenders are generally hesitant to approve loans for applicants with lower credit scores. If the lender considers the CIBIL score, it should ideally be above 600 for the loan application to be successful. However, new age loan apps that work on smartphones are more flexible on the credit score front – even if you have a lower score but a good repayment history, you might be considered eligible. If you are a first-time applicant with no previous borrowing history, your score will automatically be low. If this happens, you should apply with a leading loan application.
#2 Your loan eligibility.
Each applicant has a certain eligibility for the loan, determined by various factors, such as their credit score, age, income, repayment history, etc. Eligibility determines the amount of loan one can get when applying for the loan. One cannot get more money than one is eligible for, however, one can certainly borrow less than the qualifying amount. For example, if your loan eligibility is Rs 3,00,000. You cannot request a loan of Rs 4,00,000 from the lender, but you can certainly borrow less than Rs 3,00,000 for your needs. It’s always helpful to know your eligibility so you know how much you can borrow. If you still need more funds, you should seek them from other sources.
#3 The lending institution.
Who you borrow the quick loan from is as important as the two factors mentioned above. Traditional lenders like banks also offer unsecured loans like personal loans. However, they often have lengthy documentation processes that lead to delays in loan approval and disbursement. Delays can become problematic if you need money for a financial or medical emergency. Meanwhile, new loan modes like smartphone-enabled loan apps offer a much better proposition overall: they offer fast approval and disbursement, digital enforcement and sanctioning, minimal documentation, flexibility in terms of credit and EMI checks etc. They are also more inclusive. in terms of applicants they approve loans for, so those who have difficulty borrowing money from traditional lenders may have better luck with loan applications.
#4 The interest rate.
Each loan comes with a certain interest rate, so it is best to check it before applying for the loan. Unsecured personal loans normally have a higher interest rate than secured loans like home loans. However, the interest rate cannot be excessively high, otherwise the loan becomes expensive with heavy EMIs. The higher the interest rate, the higher the EMI and the greater the eventual repayment made to the lender (capital + interest). Always look for a loan that has a competitive interest rate or borrow as little as possible to keep the EMI amount and overall repayment low.
How to borrow the personal loan using your phone
Set up the app on your phone and check all its features and benefits. Next, check your eligibility, interest rates, fee schedule, list of documents, and repayment terms as stated on the application. Once you submit your documents, the loan application checks your credit score, eligibility and verifies your data before sanctioning the loan.
After approval, the loan is paid into your account and can be repaid monthly through EMIs.