Personal loans can provide funds to meet various unforeseen expenses. In order to avail it, you need to follow a few easy steps. The application process is also simple, as you can apply for a personal loan online.
In this article, we will discuss a guide to avail a personal loan online.
A personal loan is an unsecured loan. You don't need to keep any collateral to borrow it. Therefore, this loan is opted by many to meet expenses arising due to situations like a medical emergency, child's education, etc.
Availing a personal loan has also become very simple. This is because you can easily make an online loan application with most lenders.
Here are the steps to apply personal loan online:
Determine Your Goal
It's essential to determine the goal before applying for a loan. For instance, you might want to apply for a personal loan to fund a vacation or for your child's marriage. By determining the goal, you can opt for the right loan amount.
Check The Eligibility Requirements
The eligibility requirements vary from one lender to another. Therefore, when comparing lenders, you must check their eligibility requirements. You can visit a lender's website to understand its a eligibility requirements for a personal loan.
Make a Budget
When you avail a personal loan, you'll need to repay it via EMIs. Therefore, you must calculate the EMI amount that will be affordable to you. Based on this EMI amount, you should create a new budget for your finances. This can help you repay the personal loan effortlessly.
Apply for a Personal Loan
Once you find the right lender, you'll need to make a personal loan application. Most lenders will allow you to apply for a personal loan online. The first step is to fill an application form by entering the required details.
Submit the Necessary Documents
This is one of the most crucial steps when availing a personal loan. Generally, you'll need to submit documents like bank statements, salary slips, KYC, etc.
The lender will start the verification process once you submit the loan application. It'll check whether you meet the eligibility requirements.
The next step is the KYC verification. After the lender verifies the application, it'll start checking the KYC documents submitted by you.
Credit Score Verification
Once the verification process is finished, the lender will check your credit score. It will check your past repayments to understand if you're a reliable borrower.
In order to confirm your address, the lender might visit your home. In case you're self-employed, the lender might visit your office.
Approval of Loan
In case you have a good credit score and meet the lender's eligibility requirements, your loan application can get approved quickly.
The Lender will Offer the Loan Amount, Interest Rate, and Tenure
There are various factors that will impact the interest rate and loan amount offered to you by the lender. Some of these factors are- age, credit score, number of remaining working years, employer, etc. You can choose the repayment duration within the tenure range offered by the lender.
Payment of Processing Fee
You'll need to pay a processing fee in order to get the loan disbursed. Once you make the payment of the processing fee, the loan amount will be disbursed into your bank account. While it's crucial to understand these steps, it's also important to know about a few things when taking a personal loan. Let's take a look at things you should understand when borrowing a personal loan-
Check the Interest Rates of Different Lenders
A personal loan EMI consists of the principal amount and the interest. The interest rate varies from one lender to another. Therefore, it's crucial to compare interest rates offered by different lenders. It'll help you choose the most affordable one.
Build a Good Credit History
Your credit history informs the lender about your repayment capacity. It also helps them know if you're a reliable borrower. If you have a high credit score, then it can become easy for you to avail a loan. Therefore, it's recommended to build a good credit history before you apply for personal loan.
Understand The Charges You're Required to Pay
There are various charges that you might have to pay to avail a personal loan. Some of the charges that you should know about are- processing fees, pre-payment charges, late payment fees, part-payment charges, etc.
Personal loans online have made the application process very easy. However, you must build a good credit history to avail a loan easily. Also, submit the correct documents for a hassle-free loan application process.