15 JULY, 2023

A personal loan can be useful to get funds quickly for meeting various expenses such as weddings, medical emergencies, home renovation, travel plans, higher education, etc. Usually, you can avail a personal loan easily as it is collateral-free and can be applied online with only a few clicks. However, there have been instances when borrowers have struggled to get their personal loan applications approved because they were unaware of the factors that lenders take into account while evaluating their applications. 

Here is a list of expert tips that can help you speed up the process and get your personal loan application approved in a hassle-free manner. These tips will keep you from making common mistakes like choosing the wrong lender, applying for an unrealistic amount, borrowing more than required, or selecting an inconvenient repayment tenure.

  • Maintain a good credit score

A credit score reflects the creditworthiness and repayment capacity of a borrower. Lenders use credit scores to assess risk and determine whether to approve a loan. The higher your credit score, the lower the perceived risk and the more likely you are to get approved for a personal loan. Moreover, a good credit score also improves borrowers’ chances of getting a higher loan amount, favourable tenure, and lower interest rates. There are a few things you as a borrower can do to help improve your credit score, such as paying your bills on time, not applying for a loan with multiple lenders at the same time, and maintaining a low debt-to-income ratio.

  • Mention all sources of income

Every lender checks your loan repayment capability based on your current income status. If you have multiple income sources, be sure to mention them all on your application. This can include things like dividends, rent, freelance income, and more. The more information you can give about your income, the better chance you have of getting your loan approved quickly.

  • Apply for the right amount

It is important that you apply for an amount keeping two things in mind. First, the Equated Monthly Instalment (EMI) should be something that you can comfortably pay and second, you shouldn’t borrow more than you need. For this, you can make use of a personal loan EMI calculator. By adding information such as the loan amount, interest rate, and repayment period, the EMI calculator will provide an estimate of the monthly repayments. This can help to ensure that you apply for the right amount and avoid delays in the loan approval process. Moreover, the personal loan EMI calculator can also help to compare offers from different lenders and choose the best personal loan interest rate.

Additional Reads: 5 Good Reasons to Opt For A Personal Loan

  • Pay off existing loans

To get quick approval on the personal loan, try to pay off whatever existing loans you can. If an applicant has an existing debt that they are still paying off, taking on another personal loan can increase their monthly income expenses. With a low repayment capacity, a lender can see an applicant as a risk, which can get the application rejected. Thus, it is important to pay off whatever existing debt you can before taking out a personal loan.

To sum up

Fast approval of a personal loan not only depends on the lender but also on the applicant. By following the tips mentioned above, you can get your personal loan application approved quickly and expect a positive response from the lender.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.