Personal loans are advantageous in crises and during a financial emergency. These can be available with minimum documentation and would not require any collateral. With many banks sponsoring instant personal loans, getting a personal loan approved does feel like an easy task. Still, when you actually go for it, there can be many eligibility necessities, terms, and conditions that financial institutions don’t reveal upfront, which sometimes results in late processing of a loan.
When you’re nervous, it’s easy to fall for loan scams. Look out for these loan scam signs here.
As numerous people apply for a personal loan when they urgently need money, it becomes essential to cut out all the imaginable interruptions by using these bits of advice:
#1. Apply online
Applying for a personal loan online is the fastest yet more secured way to reach a personal loan. Once you apply by providing all the mandatory information and uploading the documents, you will get a confirmation message from the lender. The lender will approve or reject the loan application after verifying your profile, credit score and documents. And an important advantage is that you get all the updates regarding your loan application through emails and/or messages. The approval process for a loan typically takes one week time after you have submitted all the essential documents. Once approved, the expenditure can take additional 1-2 days.
It might be good for you to check with your existing bank for personal loan offers before applying somewhere else. Many banks these days offer pre-approved and pre-qualified personal loans based on your credit history. If you choose to apply with online pre-approved offers, you might get the personal loan amount distributed in your account within minutes.
Take note of the rising loan scams in Singapore. If you feel that something is not right, report them immediately!
#2. Uphold a good credit score
A credit score represents your worthiness when it comes to credit. Usually, if a credit score is above 700 it is considered good, but having a credit score above 750 can be an added benefit in quicker approval of a personal loan. So, you must have a good credit score if you want your personal loan to be approved faster.
This is the most critical criteria that the lenders use while assessing your profile, particularly in a personal loan because it is an unsecured loan that does not require any collateral. This entices many to apply for a personal loan.
Thus, your income and credit repayment history plays a major role while your loan is in the process of being considered to be approved. If you have a good credit score, the lenders consider that your profile is not risky, which means the prospect of you avoiding the loan repayment in the future is low. This increases your chances of getting the personal loan approved faster along with getting a higher principal amount, a better rate of interest, and lower processing fees.
To improve or maintain your credit score, you should pay your EMIs on time and never avoid any loan or credit card dues. The best way here is to set standing directions with your bank for an auto-pay of all your EMIs. It makes sure that your EMI gets paid routinely from your registered bank account on the due date. And make sure that you always keep enough balance in your auto-pay registered bank account.
#3. Check your credit score before the application
Even though you are familiar that you have never dodged any loan and have a good credit history, it is recommended for you to check your credit score before applying for a personal loan. There might be a possibility that you missed out on a few credit card payments on due dates and paid it a day or two later.
It can be tiring to keep track of various credit card bills. Though such delays in payments are unintended, they can still disturb your credit score. Also, a credit score can have faults or mistakes which might lead to a rejection of your loan. Noting the credit score in advance can help you fix the score before you apply for a loan.
Likewise, checking your credit score is important because different lenders have different credit score requirements. Rejection of your loan application can have a negative effect on your credit score as well. Hence, it is good to check your credit score beforehand and see if it matches the lender’s credit score criteria.
#4. A good bank balance
While inspecting your repayment capacity, lenders also check if you are upholding a good average monthly balance. If you maintain a generally decent balance, banks consider lending you because it displays you have a good repayment capacity.
Additionally, banks offer immediate personal loans, pre-approved personal loans, and pre-qualified personal loans that are entirely unified if you maintain a higher regular balance in your savings account. Such personal loans are ready for pay-outs, which can be credited into your savings account within just a few minutes.
Though, instead of getting captivated by an instant loan, you should never forget to read the terms and conditions, know the numerous charges, compare them with other lenders, and then make a smart decision.
#5. Provide precise information
Providing precise personal and income particulars will not only raise the chances of loan approval but make the entire process smooth and easy.
Like, if you are staying on rent, you need to provide your rental agreement along with your permanent address proof.
#6. Apply according to what you can manage to pay
Applying for a higher credit limit than what you can repay will lead to a loan application rejection. You do not have to offer any security in a personal loan, you should only consider your sources of income and apply only for a simply manageable amount that you will be able to repay. While assessing your credit repayment capability, you should consider all the fixed and adjustable expenses, the prospect of any increased expenses, and your current dues and monthly expenses.
When you overborrow, there is a high chance that you will end up in bad debt. To clear debts, you might need to apply for debt consolidation loans to lower your monthly repayments.
Similarly, study your debt-to-income ratio while applying for a personal loan. A debt-to-income ratio is a ratio of your monthly EMIs and your monthly income. This ratio influences the outcome of your loan application. A higher ratio shows your charges are more than your earnings.