Small personal loans are a go-to option for most borrowers. Since there is no collateral requirement, you can avail of it without pledging any collateral. This means that you don’t need to surrender any asset such as property, inventory, deposits, savings, etc., in exchange for borrowed funds.
To top it off, your lending institution won’t even ask the purpose of the loan. It is an open-ended credit facility a borrower can use to meet a number of goals, including higher education of children, funding a wedding, paying off medical expenses, and much more.
Nonetheless, you still need to meet certain requisites for approval.
How to get a small personal loan approved?
Here’s how you can boost your approval chances, that too at low interest rates:
Improve your CIBIL score
If not collateral, then what assurance do lenders have of borrowers repaying their EMIs on time? This is where your credit or CIBIL score comes into play. This 3-digit number falls between 300 and 900 points, and doubles as proof of your creditworthiness and repayment capacity. If you have a high credit score, your chances of approval at low personal loan interest rates go up significantly.
This is not to say that you’re ineligible for small personal finance if you have a low CIBIL score. You may still receive approval, but at a slightly higher interest rate. To avoid this, you can quickly improve your CIBIL score by repaying your credit card bills or ongoing loan EMIs timely.
Additional read: How to Get a Personal Loan without Documents?
Submit one application at a time
To boost approval chances, many potential borrowers falter by applying with several lenders simultaneously. Remember, each time you apply for a small loan for personal use, the lender inquiries your credit score from CIBIL. This is called a hard inquiry. Too many hard inquiries within a short period can likely dent your CIBIL score and dampen your approval chances.
Therefore, carefully select one lender, ideally based on their ROI and tenures, and apply with them. If, under unusual circumstances, your application doesn’t receive approval, you should wait for at least six months before applying with another lender.
Pool all income sources
To further strengthen your personal loan approval chances, be transparent with all your income sources to the lender. This includes both your salary or business income as well as alternative sources such as rental income or income from shares and dividends.
Proving income stability goes a long way in getting personal finance at low ROI. In case you don’t have a regular income source, fret not! Simply apply for joint small personal finance with a co-borrower who has an income source.
Additional read: What Is a Small Personal Loan?
Over to you
If you’re looking for a trustworthy lending institution that offers small personal finance at competitive interest rates, comfortable tenures, and speedy processing, your search ends at Tata Capital.
You can check your potential EMIs with us using a personal loan EMI calculator available on our website. After which, you can start your loan application online through our user-friendly portal and receive an approval within 2 minutes.