Securing a large personal loan is not an easy task. Banks and NBFCs scrutinize your credit score, debt-to-income ratio, income stability, repayment capacity, and documents. Consistently paying EMIs on time, maintaining low debt, and demonstrating overall financial discipline increase your chances of loan approval.
Personal Loan: While a large personal loan might be needed in emergencies, banks and NBFCs do not provide them readily. For loan approval, it is essential to have a credit score above 750, a controlled debt-to-income ratio, a stable job with regular income, enhanced repayment capacity, and updated documentation. These preparations pave the way for the approval of high-value personal loans.
Always Maintain a Good Credit Score
The primary and most crucial aspect for loan approval is your credit score. If your score is above 750, banks consider you reliable and may offer a lower interest rate. Timely payment of bills and EMIs, limited use of credit cards, and avoiding frequent loan applications strengthen your creditworthiness. The better your credit score, the easier it will be to obtain a large personal loan.
Keep Your Debt-to-Income Ratio in Check
Banks assess how much of your total income is already allocated to EMIs. If a significant portion of your income is already committed to debt repayment, obtaining a new loan will be difficult. Experts suggest aiming to keep your total EMIs below 40% of your total income. This demonstrates that you are a responsible borrower, and banks will be confident that you can comfortably manage an additional loan.
Show Stability in Income and Employment
Banks are assured that individuals with stable jobs and regular income will be able to repay loans easily. If you have been working with the same company for two to three years, it is a significant plus point. Frequent job changes signal instability to banks. For self-employed individuals or business owners, clear tax returns and audited accounts are beneficial.
Strengthen Your Repayment Capacity
The greater your repayment capacity, the easier it will be to secure a large loan. Experts advise clearing smaller debts first and opting for a longer loan tenure to reduce the EMI amount. This leaves you with more disposable income and assures the bank that you can handle an additional loan. A higher repayment capacity can also lead to a lower interest rate.
Keep Documents Complete and Updated
Incomplete or outdated documents during the loan application process can be a major hurdle. Therefore, always submit recent payslips, bank statements, ITRs, and identification proofs accurately. For business owners, audited accounts and GST returns are also necessary. Correct and updated documentation not only speeds up the process but also strengthens your application.
Prepare Thoroughly for Loan Approval
Approval for a large personal loan is not solely dependent on good income or score. Your overall financial discipline also plays a role. Timely EMI payments, maintaining low debt, and demonstrating job stability build confidence with the bank. With proper preparation, documentation, and financial discipline, the path to approving your high-value personal loan becomes smoother.
