Whether you are planning to apply for a Personal Loan or any other form of credit, it is important to understand the basic requirements while filling up your loan application form. After all, all want a quick and easy application process. Read this article to find out certain important factors which you need to know about while applying for a personal loan.

1. Questions to Consider Before
Applying for a Personal Loan

2. Your personal loan application can make or break your loan approval by
your lender. It is a crucial factor which helps lenders come up with a
lending decision. However, many individuals, especially first time
borrowers end up making errors in their application which results in a
rejection of their personal loan. Therefore, it becomes important for
applicants to become wary of certain things while filling up their loan
application form.
Here are few things to consider before you apply for a personal loan:

3. 1. What is the likelihood of getting an approval?
The first step before applying for a loan is to check your loan eligibility which would
help you get a clear picture of the specifications which your lender is looking for.
Second, it is important to make sure that you have a strong credit history as lenders
consider your credit score as an important factor for assessing your risk profile.
If your loan application gets rejected by your lenders, it leads to a massive drop in
your credit score. This may also set a bad remark on your credit report and the
chances are that lenders may deny you a loan in future. Experienced lenders can tell
you whether your loan application will be approved or not beforehand. They know
what their institution can approve and what can't be approved. If there is
something that you are worried about in your credit report, it is best to disclose the
concern to your lender upfront so that you can get a clear picture and
understanding about how to solve it.

4. 2. How much do you really need?
It is better to make sure of the amount of money you actually need to borrow before
you approach your lender. Before deciding how much you want to borrow, it is good
to have a budget and be clear on what you can actually afford to pay back every
month. You can also use an online personal loan EMI calculator to set your exact loan
amount requirement. Knowing your amount will also give you an idea on how well
you can utilize your funds.

5. 3. How good is your credit score?
You have a good income, a steady job, and a good bank balance, but still your
personal loan application has been rejected? What can be the possible reason for
you rejection? Did you check your credit score?
Lenders consider a number of factors when they look at your loan application and
hence your credit report is one of them. A bad remark on your report can be the
reason for your loan application rejection. When you apply for personal loan, the
bank looks at all the details on your credit report. Your credit score represents your
overall credit worthiness. If your credit score is above 750, then your loan
application is more likely to get approved and vice-versa.

6. 4. Do you have all the documentation needed to
apply for the loan?
When you apply for a loan be it a personal loan, home loan or a business loan, you
will need to keep a few documents ready for your verification. Make sure that you
have all the required documents when you apply for a loan. If you are a salaried
individual, your documents may vary from that of a self-employed individual.

7. List of documents for Salaried
• Proof of Identity: Passport / Driving License / Voters ID / PAN Card (any one)
• Proof of Residence: Leave and License Agreement / Utility Bill (not more than 3
months old) / Passport (any one).
• Latest 3 months bank statement (where salary/income is credited).
• Salary slips for last 3 months.
• Two passport size photographs.

8. List of documents for Self-Employed
• KYC Documents: Proof of Identity; Address proof; DOB proof.
• Proof of Residence: - Leave and License Agreement / Utility Bill (not more than 3
months old) / Passport (any one).
• Income proof (audited financials for the last two years).
• Latest 6 months Bank statement.
• Office address proof.
• Proof of residence or office ownership.
• Proof of continuity of business.

9. 5. Is your credit history healthy enough to repay
the loan?
Lenders look at your credit history to make a lending decision. They assess how risky
you are as a borrower. Your credit history and past repayments will represent how
well you are positioned to meet loan repayments, therefore, the healthier your
credit history is, the more likely you are to have your personal loan application
approved.

10. THANK YOU!