Car, MSME, Home Loan Approval Tips You Need To Know

Car, MSME, Home Loan Approval Tips You Need To Know

Tips for Boosting Your Car, MSME, Home Loan Approval Chances

Efficient car, MSME and home loan approvals are associated with certain practices which include maintaining a high credit score, understanding lender’s eligibility criteria and arranging all necessary documents. Other practices such as maintaining a lower debt-to-income ratio, making larger down payments and planning your budget help improve your debt management abilities, making you an attractive applicant. Read this blog further and explore tips to get approved instantly for your desired loan type. 

 

5 Tips for Increasing Car Loan Approval Chances

Get approved for a car loan easily by following these 5 tips: 

  • Check the Affordability of the Loan

Understanding the affordability of a car loan can help you repay easily without straining your finances. Use an EMI calculator, available across digital lending portals, to get an estimation of your monthly EMIs. It will inform you about the interest component, the principal of each EMI and payment dates, which can further help you plan your budget strategically. 

  • Assess Your Credit Score and the Stability of Your Income and Job

Ensure maintaining a credit score over 750, as it determines your capability of managing loans effectively. Besides your credit score, your work history and income stability are also crucial for loan approvals. 

Try to have a stable employment history of at least 2 years, along with your residency. Additionally, you must have a minimum monthly income that will help you pay off your loan balances easily. You can also mention additional sources of income in your application, which may include freelance earnings and rental income. 

  • Arrange all the Documents Beforehand

Check the necessary documents required to apply for your car loan application. Refer to the financial institution’s website and keep the documents arranged beforehand. The documents may include bank statements, income and employment proof, and address verification ID. Remember, missing documents can delay the loan approval process and impact your transaction negatively.

  • Choose a Car that Fits Your Financial Profile

Align your car choice with your financial standing. While it may be fancy enough to buy the latest model car with all the whistles and bells, it is crucial to choose a vehicle that does not stretch your budget. You may also choose a second-hand car with all the sought-after features, ensuring it will not be heavy on your pockets. 

Financial institutions will more likely approve car loans based on your repayment capabilities and financial reality. Turn your car loan into a cost of ownership, including depreciation to understand if the chosen car holds its value over time.

  • Offer a Higher Down Payment 

You may be required to pay up to 20% of the car value as a down payment. However, making a higher down payment reduces the loan amount naturally. This ensures that you have to pay lower EMIs throughout the loan term, avoiding financial strains. Additionally, a higher down payment also helps you save money on interest costs.

 

Increase MSME Loan Approval Chances

Following are 3 tips that will help increase your chances of getting approved for MSME loans:

  • Demonstrate Robust Cash Flow Management

Efficient cash flow management highlights your ability to manage timely repayments. Calculate debt service coverage ratio (DSCR) to understand capabilities to meet financial obligations. Review spending habits, maintain optimal inventory levels and maintain detailed financial records to emphasise effective cash flow management.

  • Define a Repayment Plan

Choose a repayment plan that aligns with your financial standing, ensuring it does not create any financial gap. Consider your business’ growth plans while choosing a tenure. You can afford a higher loan payment by anticipating increased revenue streams and significant expansion of your business. 

  • Highlight the Unique Selling Proposition (USP) of Your Business

Determine what makes your business different from its competitors. Highlight the unique products and services you offer, a strong brand presence and a niche market, and all other factors that emphasise your USP. This helps increase the attractiveness of your MSME loan application.

Read More: Top 5 Startup Funding Solutions for Small Businesses

Boost Your Chances of Home Loan Approval

Get approved for a home loan easily and build a safe space for you and your family by following these 3 tips: 

  • Settle Existing Debts

Make sure to settle existing debts in full settlement to demonstrate strong financial management abilities. Clearing debts lowers your debt-to-income (DTI) ratio, improving your eligibility chances for better loan terms. You can also consolidate your existing high-interest debts into a single personal loan to pay them off easily. 

  • Choose a Lower Loan-to-Value (LTV) Ratio

Loan-to-value (LTV) ratio is the percentage of the value of any property that you can borrow against a home loan. Opting for a lower LTV reduces the loan’s interest rate and improves your chances of getting approved for the credit. 

  • Consider Applying with a Co-Borrower

Applying with a co-worker who has a strong credit profile enhances your chances of home loan approval, even if you have an average credit score. 

The lender clubs the eligibility of both applications when you apply for a home loan with a co-applicant. This improves your approval chances and reduces the credit risk for lenders.

Conclusion

You can improve your chances for car, MSME and home loan approval by achieving a high credit score, demonstrating repayment capabilities, and having employment and job stability. Choosing a repayment tenure that aligns with your financial standing helps increase approval chances for every loan type. Ensure settling existing debts, and consider debt consolidation for improved chances of debt management abilities. With various loan options from Kogta Finance, make sure to avail a credit easily to plan your asset purchases and efficiently increase your profits. 

Leave a Reply

Your email address will not be published. Required fields are marked *

Facebook
Twitter
Instagram
WhatsApp