How to become the perfect candidate for a loan

At some stage or the other, most people would need an injection of capital that may not be readily available due to various reasons. In such cases, a loan from a reputable bank or non-banking financial company (NBFC) is the best way to fund the shortfall.

Loans can be of different types. Traditionally, Home Loans, Auto Loans, and Personal Loans have been the ones most sought after. Whether you need a loan right now or just want to ensure that one is easily available when the need arises, here are some quick tips to put forward a strong application.

Have your documents in order

Any loan application requires your proof of identity and proof of residence. Your PAN card details and Aadhaar details are mandatory. You may also need to furnish Income Tax Returns for the past three years, especially for home and Auto Loans. If you haven’t filed your IT returns or applied for your Aadhaar card yet, do so at the earliest.

Other documents such as ownership deeds (for collateral), balance sheets (for businesses), and bank statements and salary slips (for employees) will have to be submitted at the time of application. However, for pre-approved HDFC Bank customers, no documentation is required.

Maintain good financial karma

Your CIBIL score plays an important role in your loan application and the interest rate applicable for the disbursal. Ensure you pay all your credit card dues on time. Try to avoid too many EMIs on Credit Card purchases. If you have previous loans, do not miss payment deadlines.

The amount of credit you use, your payment history, and the length of your credit history are some factors that will affect your credit score. Anything above 750 is considered a good CIBIL score and banks will consider this to check on your reliability of repayment. These tips can help you improve your CIBIL score.

Steady progress is success

While your paper trail and credit score reflect how you have come along, it is important for the bank to know where you’re headed. Your current and future source of income is what the bank is betting on for their repayment.

Banks usually have a stronger preference for people who have a steady employment, haven’t changed jobs too recently or too often, and present no gaps in their employment history.

Safety in numbers

Having a co-applicant or a guarantor with a good credit score makes it easier to secure a loan. Especially for larger amounts and longer tenures, having a parent, sibling or spouse as a co-applicant not only splits the liability but also represents a lower default risk from the bank’s perspective.

Add muscle to your application

Assets such as house property, vehicle(s), equity investments, retirement funds, and even insurance policies reflect well on a loan application. You may not be offering these as collateral, but they represent financial security and stability from the lender’s outlook.

If some of the assets have been paid off, it looks even better. It shows that the applicant is a responsible borrower with a good history of squaring their debts.

Banks factor in a lot of things for a loan application. Similarly, while applying you need to shop around to get the best deal possible. Check for interest rate, EMI flexibility, ease of getting a loan, pre-closure fee, etc. Some banks, like HDFC Bank make getting loans a quick, hassle-free experience. No matter what type of loan you are looking for- Personal Loan to Home Loan or even a Business Loan.

The better prepared you are, the more likely you will be of getting a loan on your first attempt. So, do your homework, put your things in order and look for an ideal loan that meets your needs.

Looking to apply for an HDFC Bank Loan? Click here to see what are the different loans available.

* Terms & conditions apply. Loan disbursal at sole discretion of HDFC Bank Ltd.