How to Apply for Personal Loan: A Step-By-Step Guide to A Personal Loan Application

Personal loans can help you get out of a tight spot when you have unforeseen expenses, such as high medical bills, essential house repairs, a job loss that came out of nowhere, or even an increase in the cost of the wedding you had been looking forward to.
So, how can potential borrowers go about applying for a personal loan in the first place? Here is a step-by-step tutorial on how to apply for a personal loan quickly and easily.

1. Select a reputable lender

Prospective borrowers would do best to select a reputable lender despite the large organized and unorganized market for lenders. This would not only assist someone to acquire the best interest rate possible but also make the entire procedure simple, quick, and hassle-free.

2. Check your eligibility

Before submitting an application for a personal loan, borrowers must ascertain the maximum amount they qualify for. The monthly pay or business revenue, active loans, and EMIs, as well as the total balance due on all the credit cards, will be considered as part of the personal loan eligibility requirements. In essence, it will depend on how creditworthy a borrower is.

3. Apply online

Based on the personal loan eligibility, most licensed lenders allow applicants to submit a simple online application for a personal loan through their own websites. People who want to borrow money only need to give their basic information. These include personal details like name, age, address, phone number, PAN and Aadhaar card numbers, information about their job or business, and details about their salary or revenue from their business.
The majority of lenders also offer pre-approved loans to their existing customers, particularly those with strong credit histories, so they can take advantage of them immediately.

4. Decide the amount and loan duration

Borrowers must decide how much money they need to borrow and for how long, keeping in mind their personal loan eligibility. The interest rate on personal loans is normally higher, and it varies depending on how long the loan is for. As a result, even if they are qualified for a larger loan, one should try to limit the amount and period as low as feasible.
Additionally, borrowers have the option of choosing monthly payments or, if their lender permits it, a more flexible choice.

5. Documentation

Once the borrower knows how to apply for a personal loan, they can also apply online. The majority of reputable lenders often enable customers to submit an online application for a personal loan while remaining at home. Some lenders allow the borrower to easily upload the necessary documents on their websites, while others send an executive to physically collect all the necessary documents from the borrower.
One or more of the following may be included in these documents: a copy of the PAN or Aadhaar card, salary slips or business income proof from the previous six to twelve months, bank account statements for the previous few months showing your salary or business income, a copy of company ID proof, if you are employed, and so on.

6. Repaying the loan

Repayment plans often ask for partial monthly payments of both the principle and interest amounts in various ratios. To save money overall on interest payments, a borrower can choose to pay off the principal first since the lender would stop charging interest once the principal is fully paid off.
However, borrowers have the option to pay only the interest through equated monthly installments (EMIs) up front, and the principal balance at the conclusion of the loan’s term. This choice aids those who, for whatever reason, are unable to make a higher EMI that includes both interest and principal.

Conclusion

Personal loans are usually processed faster than secured loans. To know how to apply for a personal loan, follow the above steps. As long as you have a solid credit history, a high credit score, and meet the requirements of personal loan eligibility, obtaining a personal loan is a straightforward and hassle-free process. A qualified lender will also provide you with a favorable interest rate and customize your repayment schedule to fit your cash flow situation.