How To Get Your Loan Application To Be Accepted?

In case of emergencies, most people, if they are not able to accumulate funds, opt for debts like personal loans for helping them in such situations. What they don’t realize is that, procuring such loans may come with a lot of ease but it can harm their financial position in future. The Reserve Bank of India (RBI) has been hiking interest rates from quite some time now and although financial advisors have advised their investors to stay away from unsecured debts like personal loans, credit card loan etc mainly because of the high interest rate like 14%-24%. And the rates are expected to rise further in future. But, even in such scenarios, banks have recorded an increase in the number of loan borrowers at the rate of 10-15% year on year.

With the inflation still present in the economy, although the banks have increased their loan size by another Rs.3-4 lakh, it is not necessary that all borrowers will be treated the same way. Depending upon a lot of factors like occupation, income, credit history etc, banks may or may not approve your loan application. Here are the following reasons as to which your loan application will be accepted and once done your loan amount and the interest chargeable will be decided.

If you are a working individual with a family and have lived in the city, and have not changed your permanent address very often, for at least a decade, you have better chances for your loan application to be accepted over a bachelor who does not have a permanent address. If you are a bachelor staying in a rented accommodation, and require a loan, it is important that you give a reference which can be utilized by the bank and if you have an own house, then such references are not required. Apart from your residential status important parameters like job profile, income etc will be taken into consideration. Make sure that any job you do, you stick on to it for at least a couple of years. If you have changed 5 jobs in a period of 1 year, then your job and income will be considered as instable since your job and income is not steady and the question of loan repayment may be ill answered.

Your loan application may not approved if you belong to certain cities. People staying in places like Bihar, Chattisgarh etc find it difficult to raise a loan of Rs 1lakh. After constant communication to the authorities through the bank’s grievance cells, you may be offered a loan. The main reason as to why banks are not very comfortable in lending unsecured loans is because of the fear of loan repayment abilities. If you manage to produce strong proofs, you will be entitled for a loan easily.

The rate of interest that is to be charged on your loan depends upon your job profile. Earlier banks were quite confident when it came to lending loans to salaried employees than to self employed individuals. But now, the scenario has changed. After recession hit the globe, many employees became redundant and millions had to face job loss around the world. Apart from this, banks have a system of rating companies. If you are working in a high profile company regardless of your position you will be charged a comparatively low rate of interest and if you are working in a company that is not in the high grading standards as per the bank, regardless of how great your designation in the company is, you will have to pay more on your loan due to high interest rates. For self employed customers, a variety of documents like P&L account copies of the last two years, qualification proof etc are required for the interest rate to be decided.

If you have previously applied for a loan or are a holder of a credit card, it is very important that you keep paying your dues on time and see to that you do not have any black marks on your credit record. The main reason why this is recommended is because if you ever need to apply for a loan in future, Bank’s will look into your credit history and based on that will decide whether your loan application will be approved or not.

If you have your salary accounts or personal accounts with a specific bank and have managed to maintain a squeaky clean credit record, you will be entitled to benefits like a processing fee waiver, reduction in the interest rate of up to 5%, better services etc.

But before being carried away by lucrative loan offers it is important to understand and ask yourself whether you actually need a loan or not. If it is a necessary yes, try breaking some investments if possible since it is way cheaper than signing up for the personal loan and bearing its implication on your finances for a long period of time.

Apart from all these factors, for a prudent customer it is important that you read the terms and conditions of all the documents carefully before you sign up for a loan.