How to Apply for a Personal Loan in Rural Regions?
Depending on your location, the process, eligibility, and documentation required for a personal loan varies. The basics remain the same, including shortlisting the right lender, getting the ideal interest rate and terms and conditions, furnishing the documents, applying for the loan, and receiving the amount. However, if you are situated in a rural region and wish to apply for a personal loan, you have to be better prepared to meet the key personal loan disbursal criteria.
Let’s understand the criteria that an application from a rural region must meet.
Eligibility
Eligibility is a broad criterion that includes the age limit, income, mode of income, loan amount, and various other factors. While the lenders maintain the same age limit across the country, fulfilling the income criteria may be a challenge for rural applicants. The income level in rural parts is comparatively lower, largely due to the lower cost of living requirements and limited income generation opportunities. As a rural applicant, you have to ensure that you meet the minimum income slab required to become eligible for a personal loan.
Salaried applicants find it easier to get their loans approved as they can readily provide income proofs like experience certificates and payslips. However, you can apply for a personal loan even if you are self-employed. You may have to provide proof of business experience and financial statements to authenticate your income and experience.
Documentation
While applying for a personal loan from a rural region, the documentation may differ depending on the use and availability of documents in the rural area. Documents like voter’s ID and ration cards are readily available in rural areas, while Aadhaar enrollment is also gaining ground in the interiors of the country. With these documents, you can meet the proof of residence and proof of identity requirements.
If you are not a salaried person, it may be wise to file your Income Tax Returns regularly to authenticate your annual income. You will need to formalize your self-employment/professional financial documents so that your lender can quickly process your loan.
Credibility
It may be comparatively challenging to build your credit score in a rural setting as some of the parameters may not be applicable. For example, the opportunity to use a credit card may be limited, while there is an unorganized loan market present in rural areas. You should ensure timely payment of your existing loans to ensure that you have a good credit score. A good credit score is important to get favorable personal loan interest rates. Be well-prepared before applying for your loan, as loan rejection can also lower your credit score. It is advisable to check the eligibility criteria of the lender thoroughly before applying for a loan.
Existing liability
If you have multiple existing loans, always use a personal loan EMI calculator to check your additional EMI burden and repayment capacity. The lenders often inquire about your existing loans to gauge your monthly liability. The burden of existing liability may have an impact on the approved loan amount. It is advisable to reduce your existing liability before applying for a new loan. Relying on the undocumented and unorganized loan sector can affect your repayment capacity at a later date, even if your new personal loan gets approved.
With rapid digitization, it is now easier to apply for a personal loan from any part of the country. You can apply for a personal loan online and check all information and criteria for a personal loan on your lender’s website.
