Confused About Applying For A Personal Loan?

Snneha Lukka october 3, 2019

With simplified and easy-to-use features like online application, quick approval and disbursal, affordable repayment tenures, personal loans have become more accessible for everyday people. However, there are so many options available that it can feel overwhelming to know how to go about the process in the first place. It’s important to note that every bank and lender has its own set of different eligibility criteria that determines whether an applicant can qualify for a loan. These eligibility parameters includes salary, credit score, age, location, and KYC documents.

A common mistake that applicants (especially first-time borrowers) make is applying to lenders without knowing or checking their eligibility criteria. An applicant who applies for a loan without meeting a lender’s basic eligibility criteria will be rejected automatically. Once you know the lender’s eligibility criteria, you will know whether you can qualify for a loan from that lender. Always ensure to apply to lenders where you meet the minimum qualifying criteria, so as to avoid pre-rejection of your application. In addition to this, we’ll discuss below a few other important factors that will provide clarity on what to do if you want to apply for a personal loan.

1. Keep Your Finances in Check

A good credit history is one of the most important criteria that lenders look at when they review loan applications. When you borrow money from a bank or lender, all the details about your repayment history are recorded by credit bureaus like CIBIL. A high credit score proves that an individual is a creditworthy customer who can be trusted to repay a loan. Having a positive credit history not only increases your eligibility for borrowing a larger amount in the future; banks and lenders will also offer you better interest rates and repayment terms.

However, credit scores are just one parameter that lenders use to assess an applicant’s request for taking a loan. Other important factors include your income, employment history, monthly average bank balance (MAB), and fixed (FOIR). Lenders assess these factors from an applicant’s last 3 months bank statements. Therefore, increase your chances of getting approved by making sure you have low or non-existent debts, maintaining a high monthly bank balance, and ensure that your expenses are overall low. If any one or more of these factors aren’t up to par, try to wait for at least 1-3 months to work on your finances and credit before applying for your loan.

2. Consider All the Criteria of a Loan

When it comes to money, we all love saving a few extra bucks to get a good deal. This is also commonly seen in those who are looking to apply for a personal loan, since they are “shopping” for the lowest interest rates possible. While the interest rate is an important factor to consider, it shouldn’t be deciding parameter by which assess your options for a personal loan. When you are looking for a personal loan, one of the more important factors to keep in mind is how much your monthly EMI will amount to.

Monthly EMIs are one of the most crucial factors to consider, because your ability to repay them with ease will affect a number of other things- such as your credit score, and your eligibility for getting a loan in the future. Because many borrowers want to keep the overall interest rate low, they actually end up paying much higher EMIs, or reducing their balance loan EMIs, in which the initial installments are rather high. Therefore, when you are considering a personal loan, always use a personal loan personal loan EMI calculator to calculate how much your monthly EMI will come up to. Ensuring the EMI amount is something you can easily afford will not create a significant burden on your finances or negatively impact your credit score.

3. Keep Your Documents Ready

Every bank or NBFC has to follow a mandatory Know Your Customer or KYC process before allowing a potential customer to utilize their services. KYC is a process that aims to curb frauds and verify a customer’s identity. As an applicant, one of the most important things you would want to do is keep all your documents required for a personal loan. These documents are very common KYC documents that everyone has. The main categories of KYC documents cover name & age proof, photo identity proof, address proof, and salary proof.

One of the most common reasons that a personal loan application gets rejected is because the applicant hasn’t submitted the correct documents at all, or because the documents provided are uploaded in the wrong places of their application form. You can easily avoid this by carefully going through the application form in advance and doing a final check before you send off your application to the lender.

It’s common for many banks to request a large number of personal documents from applicants, which can be burdensome to arrange for. However, the documents required for a personal loan from Upwards are very minimal- all you need is your PAN card, Aadhar card, salary slips and bank statements! With our paperless process, all you need to do is fill out the form and upload your documents via our app or website.


Applying for a personal loan might seem confusing, but it’s all about knowing how a loan application is assessed and if there are any areas you need to improve on before you apply. Make sure to carefully check the lender’s eligibility criteria to see if you qualify for a loan. Also knowing on what basis lenders assess loan applications makes it helpful to know what you might need to improve on. Keep the following tips in mind and you’ll have a far greater chance of getting your loan approved.

Snneha Lukka

october 3, 2019

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