Things that need to be done before applying for a personal loan

1. Examine your budget

Dreams are sweet, especially when they are real. Sit down with your monthly budget and find out if you have another place to pay. Ask yourself this: After I pay all my monthly bills and set aside money for the future, do I have enough money to pay off my debts easily? Only then search for the personal loan apply online option.

2. Stop taking credit

Lenders fear one thing: Borrowers who do not pay their debt. Here are the red flags they are looking at:

• The borrower does not have enough money
• The borrower has too many outstanding debts
• A borrower who neglects new debt

You can easily brand them in all three of these boxes when you buy a new car or add credit to your charger cards in the months leading up to the loan application. Ideally, you will not take out a personal loan for an emergency. You may not have time to prepare for financial challenges. This is why it is so important to keep debt under control, whether you plan to apply for a loan or not.

3. Check your credit report

It is estimated that 1 in 5 Indians who check their credit reports finds at least one mistake. And one mistake can easily get you down on your debt. The higher your debt, the better the interest rate and the terms of the loan you may be offered. If you find an error (or errors), send the dispute to the credit bureau. You can check your credentials in the IDFC personal loan status and see if you have a good credit score.

4. Know what you want

Mention that you plan to refinish your basement. You may want to do it now, but work may wait. Knowing what you want in a personal loan before applying is a good way to determine if it is the right time to use it. For example, if your ideal loan has an interest rate of 5.99% for five years, look for an approaching loan. If all you have now is a 9.99% interest rate and a three-year period, your best bet would be to do one of three things:

• Work to increase your credit score.
• Wait until the total interest rate is too high.
• Find another way to pay for your project.

5. Organize the documents

For some, the worst part of the loan process is the collection of documents you need to use. Make it easy for you by having the following documents ready for use.

• Driving licenses or provincial ID
• Social Security Card, passport, or birth certificate
• At least two latest salary stubs
• Tax returns for the past two years
• Recent bank statements
• Statement of collateral, lease agreement, or utility bills (for verification of addresses)

Each lender has his preferred way of doing business and may request a different set of documents. As soon as you can provide the required documents, you can quickly learn about the best personal loans you can get.

Preparation pays off

Here's how taking the time to prepare can benefit you:

• Reading your credit report gives you a chance to see what you can improve on. For example, if your debt-to-income (DTI) is higher than you should be, you know it's time to pay off your debt or increase your income.
   
• Taking the time to improve your credit score means you will be able to get lower prices and better terms.
   
• Having a list of existing debts ready makes integration easier for you and your lender.
   
• Arranging your paperwork (such as income statements) can make tax time less stressful for you.
   
• Personal loans can be very helpful, especially if you take the time to establish yourself as a qualified borrower.