Do's and Don’ts of Getting a Personal Loan for a Business Owner
Financial issues can arise at any time, so having emergency money in your bank account is essential for surviving through difficult times. But, if you only have a tiny portion, you could apply for a personal loan.
A personal loan is suited for any occasion such as a wedding, home renovation, vacation. But since it’s an unsecured loan, the amount of interest for a personal loan is more than home loans. It can vary up to 3-10% of home loans yet requires fewer documents and gets approved within minutes.
Do you want to know how to get approved for a personal loan? Remember the dos and don’ts for getting your loan approved instantly.
Dos And Don’ts of Getting a Personal Loan:
Here are a few personal loan tips and tricks that can help you get a loan quickly.
Do's:
- Compare the interest rates.
- Decide the loan amount you want.
- See hidden charges.
- Check the eligibility criteria.
Don’ts:
- Take heavy loans.
- Apply for multiple loan applications at once.
- Ignore your credit score.
- Reject the first loan offer you get.
Let’s discuss these points in more detail.
How to Get Approved for a Personal Loan?
Use these personal loan tips and tricks to get approved within minutes and with zero hassle.
1. Fulfil the minimum criteria.
The age criteria for getting a personal approved loan are 21-60 yrs (salaried person) and 25-65 yrs (entrepreneur). You must either be working in an MNC, self-employed, or be a businessperson to get approved for a loan.
It also depends on your income stability, and if it is highly volatile, there are fewer chances of your loan getting accepted. You can also show your assets & liability, spouse income to increase your chances of getting a loan.
2. Maintain a good credit score.
A credit score of 750+ will ease your process of the loan application and minimises the hassle required.
Your credit score depends on the following factors:
- Paying on-time credit card bills.
- Paying EMI on time.
- Zero default payments.
So, if you clear all the previous debt on time, you will get your loan approval instantly.
3. Don’t apply for multiple banks.
Never apply to multiple banks for a loan application simultaneously because this may reject your chances of getting the approval. Lenders do not prefer to lend money to these kinds of applicants, so avoid it.
It also hurts your CIBIL Score, which can be a problem in the future.
4. Decide your risk appetite.
Be wise while choosing the loan amount because a heavy amount will cause more trouble, so it’s better to opt for a small amount. The amount should not exceed over 30-40% of your income, or else, it’s risky. Use a calculator to calculate the interest, tenure, and EMI while applying for a personal loan because that will get deducted from your bank account.
5. Clear previous loans.
As we said earlier, banks strictly reject the loan application if your preceding loan is pending. But if you still desire to get a personal loan, you need to complete your loan repayment and wait for at least six months before applying for personal loans. Banks follow these rules because they don’t want to manage multiple loans for a single person simultaneously.
6. Check the interest rates.
Research the interest rates online for all banks and choose whichever offers you the loan at the minimum interest rate. Avoid taking loans in the first go, wait for some time and then opt for a loan, or else you’ll regret exploring later. Wait for occasional offers like Diwali or Christmas to get loans at a lower rate, but if it is an urgent bargain with the lenders.
How to get a personal loan with no credit?
When you have bad credit or zero credit score, there are fewer chances for you to get a personal loan, but there are several ways by which you can get an approved loan, even with a bad credit score. Use these personal loan tips or hacks while seeking loans from lenders to get an instant approval for loans.
1. High-income salary benefit.
The high-income salary determines if you can repay the loan. Suppose, if you work in a high-paying job (MNC) and wish to opt for a loan, you can get instant loan approval based on your past transactions history. It also lowers down your effort and states lenders you will repay within the period.
2. Collateral based loan.
The collateral-based loan allows banks to give you loans by mortgaging your assets like FD, vehicle, real estate, gold, etc. This scheme enables you to seek loans on a lower interest but has a high risk. But, if you cannot repay your loan within the time, the lender will confiscate your assets under the legal agreement. Hence, if possible, avoid these schemes because of the high risk involved.
3. Cosigner Loan.
The cosigner loan agreement makes someone else repay the loan on your behalf if you cannot return it. The person will be liable to repay your debt, or his credit score will get hurt.
The cosigner can be your friend, wife, family-relative, parents, etc. It is a better solution in situations where your loan application gets rejected.
4. Choose a small loan amount.
If you are applying for a loan for the first time or have a bad credit score, you can start with a small amount because it gets quickly approved from banks, and the amount will get transferred to your account within minutes.
A personal loan comes with high interest, so it’s better to consider taking a small loan amount because you can also increase your credit score with time.
5. Consider using loan lending apps.
The loan lending apps are an alternative solution for seeking a personal loan as they instantly add the amount to your bank account after completing the KYC and uploading the PAN Card details.
The online loan lending apps require less paperwork and offer loans up to 1-2 lakh rupees, which require zero prepayments but choose them wisely. You can check the credibility, app downloads, reviews, etc., before applying for a loan application.
KreditBee, CASHe, MoneyTap, MoneySense, mPokket, etc., are the best apps that instantly approve your loan application.
Conclusion
Lastly, if you are going to apply for a personal loan, use these personal loan tips and tricks to get it approved within minutes, but if you are still getting rejected, you can opt for the above-discussed methods to get a loan even with low credits.
And if you need help with a personal finance tracking software that calculates your income, expenditure, loan, repayment, etc., you can connect with us. We help you track everything with our easy-to-use mobile application.
Also Read:
1) How To Purchase A Good Running Business In India?
2) How to start an electronics export business in India?
3) What are the Risks in the Onion Export Business?
4) How To Find Customers For Furniture Export Business?
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FAQs
Q. Can a new first-time applicant apply for a personal loan?
Ans. Yes, you can apply, but the interest rates will be higher compared to the regular bank’s customer, or you can use the above-discussed methods to apply for a personal loan.
Q. What is an unsecured loan?
Ans. In unsecured loans, lenders do not mortgage your assets, unlike collateral-based loans, but offer loans on your credit score.
Q. How to improve your credit score if you have a huge loan?
Ans. In that case, you should increase your loan tenure to lower your monthly EMI’s. This hack will help you comfortably repay your debt without worrying about the interest.