A Personal Loan is one of the easiest ways of sorting out your financial needs. Whether you want to pay for your child’s education, buy a home appliance, or go on a vacation abroad, a Personal Loan can help you cover all the expenses. And the best part? A Personal Loan is an unsecured debt, which means that you don’t have to submit any collateral to procure this loan. All you have to do is visit a financial institution or log on to their website, apply for it, and submit the required Personal Loan documents. Approval of your loan application is a quick procedure, but the sanction and disbursal processes are completely different scenarios altogether.
Let’s take a look at what influences a Personal Loan sanction and disbursement.
Credit Score
Your credit score is a record of your debt repayment history and the loans you have taken so far. Your potential lender will analyse this report critically before sanctioning your Personal Loan. Also, since a Personal Loan doesn’t demand collateral, financial institutions will be even more cautious while sanctioning one.
Always maintain a good credit score by repaying your debts on time, and, if there’s a pending loan, close it before applying for a Personal Loan.
Financial Stability
A Personal Loan comes at a high rate of interest, due to its debt type, which is why it becomes all the more important for lenders to assess your repayment capacity. They will ask you to state your salary and expenses to determine your financial stability. Generally, lenders will not approve your loan if the EMI exceeds 50% of your monthly salary.
You can check your Personal Loan eligibility before applying for the loan. When you apply for loan online, use the personal loan EMI calculator to determine the loan amount you’re entitled to borrow.
Employment Status
If you’re a salaried individual, lenders will take your job security into account before sanctioning the loan amount. If you’re working with a reputed organisation and haven’t switched too many jobs, then your Personal Loan will be sanctioned quickly. Also, if you’re working in a renowned MNC or have a government job, lenders might even be willing to lower the rate of interest.
If you’re planning to switch jobs, it’s advisable that you do so after applying for a Personal Loan. Lenders might be hesitant to sanction a Personal Loan to someone who’s just taken on a new job.
These are some of the factors that will influence the approval and sanctioning process of your Personal Loan. But, if you have all these parameters under check, your loan amount will be sanctioned and disbursed quickly.
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