8 Things To Keep In Mind When Applying Loan Online

Are you thinking of applying for a personal loan? Unsecured personal loans are a great way to meet your various funding requirements within short notice.  Lenders do not require any collateral when it comes to reviewing loan applications, however, if you’re looking for great deals you’ll have to consider your eligibility criteria.

There are different factors that go into calculating your personal loan credit limit. Just because you apply for a Rs 5 lac loan doesn’t mean that the bank will approve it. To increase your chances and to ensure you’re able to pay back on time, here are a few things to keep in mind when applying for a small loan online.

1. Take Your Employment Into Consideration

This goes without saying but before applying for a small loan, take a look at your income. Ask yourself if you’ll be able to pay back the borrowed amount in time. Having a bad credit history and getting blacklisted by lenders is the last thing you’d want.

Most lenders will check your bank statements and look for proof of stable employment. Just working a job isn’t enough, you have to show that you’re reliable financially and can afford to make repayments in time.

However, if you’re applying for small loans on lesser amounts, this is not a problem. Banks and NBFCs give flexible EMI tenures which make repayments very convenient. The tenure for a small loan can be anywhere between 6 to 18 months, depending on the amount you are borrowing. You can borrow from Rs 5,000 to Rs 5 lacs when it comes to these small loans online, which is why they’re considered convenient.

2. Keep A Low Credit Utilisation Ratio

The Credit Bureau and your lenders keep tabs on how much you’re spending when taking a loan. Borrow only as much as you need and don’t go overboard with your expenses. Low credit utilisation will put a lesser financial strain on your repayments and show that you’re reliable. Your credit utilisation ratio can impact up to 30% of your overall CIBIL Score – it’s that important. You can calculate your credit utilisation ratio by dividing your credit limit against your card’s balance and multiplying that number by 100.

3. Talk To Your Lender About It

If you’re self-employed or applying for a small loan for the first time, it’s always advisable to talk to your lender. Write down your financial goals and define your reason for utilising the credit. Lenders have experience in disbursing different loan amounts and have worked with various businesses. If you’re starting a new venture or business but aren’t sure how much capital you need, talking to them will give you a good headstart.

Sometimes you may find yourself looking for emergency credit for buying new equipment or come across unforeseen business expenses. And applying for multiple personal loans at the same time is not a good idea since it could negatively impact your CIBIL Score. So when you’re applying for a personal loan, think carefully about the loan amount, review your repayment capacity, and talk to your lender about the business details before applying to them.

4. Have A High CIBIL Score

A high CIBIL Score of 750 and above is an easy way to ensure that you get your loans disbursed quick. Lenders won’t hesitate to grant you quick disbursals if you show that you’ve got a good CIBIL credit score. If you don’t have a credit history, you won’t have a CIBIL score generated yet on the database.

The best way to create a CIBIL Score is to apply for a small loan online. When you make the first repayment, the Credit Bureau will keep a record of the trasaction and assign your account a score. Apply for more small loans in the future, keep making timely repayments, and you’ll see your CIBIL score gradually building up. It’s that simple but it takes a bit of consistency and financial discipline to get to that point.

5. What Are You Using It For?

Are you applying for an unsecured small loan for your business or just for meeting personal expenses? The amount you borrow will depend on what you’re going to be using the money for. Give your plans some careful thought before reaching out for these loans. The good news is that you don’t have to put up any collateral and the entire application is paperless.

6. Read The Loan Agreement Carefully

Don’t simply sign the loan agreement documentation without reading. You don’t want to be taken by surprises if any clauses are accidentally broken. Take your time and go through the fine print. Understand all the fees, charges, and policies involved in the disbursal of the loan. Small loans do not have any processing charges in most cases. Some loan agreement policies may charge a penalty amount if the applicant fails to make their repayments in time.

7. Use An EMI Calculator

An EMI Calculator lets you calculate the interest rate for your principal loan amount. Personal loan repayments can quickly become a problem if not managed properly. Before applying for one, make sure you use an EMI calculator online to enter the loan amount and see how much interest you’re charged. You can set the tenures on these tools and get an approximate assessment.

8. Try Other Alternative Loans

If you’re applying for a personal loan but find yourself not being eligible for one, you can try other alternatives. For example, you don’t need to have a credit history or collateral when it comes to applying for gold loans as a self-employed or salaried individual.

The rates for personal loans can vary between 16% to 25% and you can get deals as low as 9.5% interest rates if you have an exceptional CIBIL Score and financial standing. You can apply for top-up loans on home loan applications as well and corporations are willing to give a larger amount if you demonstrate sufficient creditworthiness.


Loans are of different types and there are various organisations that offer flexible repayment conditions. It’s important to carefully think about the purpose of your small loan before filing your application. Make sure you have your Income Tax Return statements ready which date back up to 2 years.

You’ll also need to keep your KYC documents and bank statements in hand when applying for these. If you have an existing repayment pending, it’s advised to clear them first before applying for new small loans since it could affect your credit history and lead to negative consequences.