5 Ways you can Boost Your Loan Approval Chances During COVID-19

Quick loans online act as a valuable tool to bring you closer to achieving your short-term financial goals, such as renovating a house, purchasing a car, or planning a vacation. Although quick loan companies can bail you out of sudden financial emergencies, you must do everything possible to improve your loan eligibility. Continuing on the topic, in this blog post, we discuss five ways you can boost your loan approval chances during COVID-19. Read on!

1. Add a Co-Applicant

Many factors can reduce loan approval chances, such as insufficient income, higher FOIR, low credit score, and failure to meet the loan eligibility criteria. So, you can opt for a joint loan with a guarantor or co-applicant who will take equal responsibility to pay off the loan EMI, thereby reducing your credit risk. Ensure that the co-applicant has a stable income, good repayment capacity, and a good credit score to improve the overall loan eligibility and boost loan approval chances.

2. Choose a Longer Tenure

People who face loan approval hurdles can also opt for longer tenures, as it can help lower their monthly EMIs. You can also use an online EMI calculator to select an ideal tenor whose corresponding interest rates and EMI matches your repayment capacity. It is, however, essential to ensure that the longer loan term does not translate into higher interest payments. Try to foreclose the loan or make part prepayment whenever you have surplus funds. Also, borrowers must make sure that the overall interest savings through prepayment must significantly outweigh the prepayment charges if any.

3. Strengthen Your Credit Score

A credit score is one of the most essential and initial factors that providers of quick loans online consider while assessing the borrower’s creditworthiness. Banks also review the loan’s credit risk premium components if the borrower’s credit profile undergoes a substantial change. All these factors make it essential for borrowers to build a strong credit history before applying for a loan. If you are new to credit, you can build your credit history by adopting a controlled approach towards credit cards and clearing off all outstanding dues on time. If you have a low credit score, you should try and limit your credit utilization ratio to 30%, maintain a balanced credit mix, and repay your loan EMIs and credit card bills on time.

4. Reduce Your FOIR

FOIR, or Fixed Obligation to Income Ratio, refers to the proportion of a borrower’s income currently being used to repay all debt obligations such as insurance premium, loan EMIs, and SIP contribution. Lenders generally prefer to lend loans to borrowers with FOIR within the 40-50% mark (including the new loan’s EMIs). For this reason, applicants must maintain their FOIR within that range. If you have a FOIR higher than the specified limit, you must consider prepaying some of your existing debts to bring it down.

5. Opt for a Lower LTV Ratio

LTV, or loan to value ratio, is the proportion of the borrower’s property value sanctioned by loan companies in the form of the loan amount. Lenders set the LTV based on their credit risk assessment of the applicant. Besides, regulators have induced mandatory caps on the lender’s LTV ratio for a gold loan, home loan, and loan against securities. Suppose you are planning to avail a secured loan. In that case, you can boost your loan eligibility by opting for a lower LTV ratio. It implies lower loan requirements and increases your chances for loan approval.

Wrap Up

The COVID-19 has caused significant disruption to many facets of people’s daily lives, and hassle-free access to money is an issue too. Eliminating unnecessary expenses and trying to repay all existing loans on time helps you avoid any hindrances when applying for quick loans online. If you are searching for a reputable quick loan company in India, look no further than KreditBee. We are a one-stop destination for people looking for quick and instant personal loans. Just download and install our online loan app to apply for instant loan approval. You can also email us at [email protected].