Avoiding Common Mistakes When Applying For A Personal Loan Online: Tips For A Smooth Process

Personal loans are preferred in unexpected financial crises due to their quicker availability, no-end usage restrictions, minimum documentation requirements, and collateral requirements. In the application for personal loans, borrowers tend to miss critical factors that contribute to their rejection and thus become ineligible for a loan.

Whenever you apply personal loan online, always have a clear mind and think twice. This article will lead you to the primary factors you should consider and avoid making any mistakes when you apply personal loan online so that you do not suffer any loss.

Factors To Consider To Avoid Mistakes When Applying For An Online Personal Loan

The significant facts to look after when applying for a personal loan online;

1. You have not reviewed your credit report 

Whenever you apply for credit, lenders check your ability to pay using credit bureaus' data. Your credit score shows how responsible you've been with your credit in the past. In addition, checking your credit file before applying for a loan can help avoid any potential errors being overlooked, which could affect your credit score and lead to the rejection of the loan application.

2. By submitting direct applications to multiple lenders

Once you submit a loan application directly to lenders, they'll start requesting credit reports on your creditworthiness from credit rating agencies. Such lender-initiated requests are termed hard inquiries, and each is listed in the inquiry section of your credit report. A significant reduction in your credit score could be achieved if you submit several loan applications simultaneously.

1. No consideration was given to the possibility of alternative financing

Consider alternative loan options, such as secured loan options, including top-up home loans, loans against securities, loans against property, and loans against FDs. Similar to personal loans, these loans do not have any end-use restrictions and are usually offered with lower interest rates and more extended repayment periods than private loans.

2. Not taking account of your ability to repay

The lenders shall assess your ability to repay the debt by considering the fixed obligation ratio for income, i.e., the proportion of current income you will consume due to paying off debts. Lenders generally prefer applicants with a Fixed Obligations to Income Ratio (FOIR) of 50% to 60%, including the EMI of the new loan. So, you must choose a loan term with the corresponding EMI to keep your FOIR within that range.

3. Not compared to a range of potential lenders

To compare and choose the right loan product and lender based on your credit score, income, and other eligibility criteria, it is advisable to visit an online financial marketplace, given that personal loan interest rates can range from 10.35% to 24.24% p.a. You must not limit your comparison to only the interest rate.

So before applying for a personal loan online, always avoid these mistakes to avail of your loan instantly. If you plan to apply for a personal loan online, go with India’s safest app, Fibe. To satisfy your financial obligations, Fibe personal Loans is a simple and fast way to do so. The application process is quick, and you will receive funds instantly from your bank account. Personal loans such as automobile, education, wedding, medical, and so on are offered at low interest rates.