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Applying and qualifying for a loan

At some point in time, you may have realized a need for a loan whether it was personal or to help your business. Loans have become an integral part of our lives as the feasibility and ease of taking the loan improves considerably. With a large number of banks and financing options available, for things as small as a mobile phone to as big as a house, the world has become inexpensive and affordable. Whether at one place or the other, getting qualified for a loan is also possible and especially so when one is prepared well.

How to get qualified for a loan

The first step is to build a credit score. A credit score is a tool that tracks your financials and gives a rating to help banks understand your ability to pay your debts. Higher the score indicates better the financial history, making you a better candidate for a loan. Being prepared also means you need to know and gather all the required documents, paperwork and proofs. Lending organizations such as banks and non-banking financial companies (NBFCs) check all documents in conjunction with your credit score to ascertain if you qualify for the loan.

Getting the loan

Banks and NBFCs are always concerned regarding repayment – whether it is personal loans or small business loans. In order to prove that you have the capability and the willingness to pay back what you owe, you need to create a strong business plan or indicate through your past loans that you have always paid back on time. In certain cases, financial institutions may also ask you to provide collateral for large amounts so that they have the assurance on the repayment. Asking for a guarantor or nominee is also a common practice to ensure repayment.

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