It happens to almost any working adult – you have bills to pay and obligations to settle, yet your salary is not enough to cover for them all.
Unless you’re comfortable borrowing money from your friends and relatives, the practical solution to your problem is to find the best personal loan from commercial banks. You can borrow enough money for your obligations and pay it in monthly instalments, with interest, of course.
However, not everyone can secure a personal loan, even if you are employed. Banks tend to be strict when it comes to screening applications. Apart from the proper documentation, the bank has to establish your capacity to pay for what you borrowed.
Who can apply for a personal loan?
You should be employed and have at least a year of tenure in your current company. You also need a PHP 21,000 monthly income at least to be seriously considered, although the amount may vary depending on the bank. It also helps if you’re an existing credit card holder for at least one year.
If you’re feeling confident of your chances, check out these tips on how to increase your chances of approval:
- Check your credit history
Banks will zero in on your credit history. They will check your existing debts and see how you pay them. Needless to say, instances of late payments, bounced checks, and other delinquent behavior is a red flag to your credit history. Do you maintain credit cards? The bank will certainly check your accounts to know how you maintain your credit line.
Some people think that having no debts or having no credit cards will greatly improve their chances of approval. This is not always the case. Having no payables means the bank has no means to establish your payment behavior. This can actually backfire on you. Also, having a credit card means your credentials were already checked and approved, which is a plus for you. If your payments are prompt, your chances for approval becomes high.
- Maintain a savings account
If you have no credit history to show, the bank can turn to your savings account for reference. If they see that your account always has funds and has never hit zero balance, it can already become a basis for approval.
- Make sure that you supply only factual information in your application form
You can’t bluff your way into a personal loan application, that’s for sure. Screening is a rigorous process and the credit check will be very thorough. The bank is very particular about the veracity of your information. If there are any unclear information or if there are inconsistencies, expect a call from your loan officer.
Make sure that you can be reached at all times while waiting for your loan to be approved. They can easily disapprove your loan if they can’t get hold of you for verification.
- Shop around for the best deal
Banks offer a wide variety of payment terms to suit your financial capacity. Make sure to compare interest rates and loan terms before handing over your application.
There are traps to avoid when applying for a personal loan and you should find a way to go around them if you don’t want to waste your time and effort in applying. Your loan officer should help you increase your chances of securing the loan and assist you in terms of payment terms.