Life is uncertain and despite one’s best efforts at financial planning, there may be situations when one is faced with a financial emergency and needs immediate and urgent financing. In times such as these, Personal Loans are the best bet because they are largely collateral free, unsecured loans that can be used for a wide range of purposes. However, traditional personal loans are expensive and difficult to get. Banks and credit card companies charge anything from 36% to 52% and require a lot of documentation. A large part of the Indian population is still denied access to cheap and easy credit. This is where P2P lending steps in. P2P Personal loans are convenient because they are short-term loans that range from a tenure of 6 to 36 months and if the borrower is found creditworthy, are disbursed quickly. The personal loan interest rate on Faircent.com starts from 12% p.a

Personal Loans are often mistaken for debt traps by many and this keeps people away from applying for a personal loan. For those who are in urgent need of funds and are wary of applying for a personal loan, they must know that a P2P personal loan is a perfectly legitimate, safe and convenient way to access finance. Applying for a P2P personal loan is as easy as the click of a button since the whole process is online. P2P lending connects lenders and borrowers directly thereby reducing intermediary margin and helping Borrowers get lower interest rates. A Borrower’s loan request is funded by several lenders who can assess your creditworthiness online on a real-time basis. However, there are certain things you need to put in order before applying for a P2P personal loan. Here is all you need to know before you apply for a P2P personal loan.

Understand your CIBIL score

Your CIBIL score plays an important role in the approval of your personal loan. CIBIL is India’s premiere credit bureau that assigns you a three-digit score that ranges from 300-900 depending upon the way you service your existing credit lines. Thus, make sure that before you apply for a personal loan, you have done enough to understand and if required improve your CIBIL score. Most traditional finance institutions expect a score upwards of 750 points. However, P2P lending platforms do not depend only on CIBIL score. Faircent.com’s fully-automated credit evaluation system uses more than 400 new age data points to evaluate across 120 parameters to understand the Borrower’s intent, ability, and stability to pay. By using new-age social, financial and personal data, Faircent.com provides access to credit to a lot of under-served but deserving Borrowers.

Traditionally shunned by financial institutions, people with thin files, which means little or no credit history including CIBIL score, can now look towards P2P Lending. Faircent.com facilitates loans for such Borrowers under an Unrated category of Borrowers thus providing them with an opportunity to access credit.

Check your own eligibility before making an application

These days many financial websites provide online calculators that you can use to check your loan eligibility before you apply for a personal loan. You can use one or more of these calculators to assess your creditworthiness based on the credentials you will be required to provide online if you choose to use them. It is a good idea to use these calculators to get a basic idea of the Personal Loan Eligibility Criteria based on factors such as your age, income and tenure your job. Also, knowing in advance your repayment schedule will help you prepare for repayments.

Compare before you apply

There are several loan aggregators today that provide the details of all the personal loans that are on offer online. Before settling for a lender who has come out with a catchy advertisement for personal loans, compare the key features of the loan such as the interest rate, tenure, and other terms and conditions before applying for a personal loan. For cheaper and faster credit, look beyond traditional lenders and consider getting a loan on a P2P Lending platform. These are new age innovative virtual loan marketplaces that act as a common platform where private investors take on the role of a lender and a borrower may directly get in touch with such lenders to take a loan from them. The platform should be transparent and credible. Faircent.com, India’s largest P2P lending platform provides access to more than 10,000 registered lenders and also provides all data transparently on its website enabling Lender to reach decisions with respect to funding your P2P personal loan faster.

The advantage of P2P Lending platforms is that a lender can get fixed, inflation-adjusted returns on his investment for a stipulated time frame and a borrower who may be finding it difficult to access a loan from a traditional lender get a loan at a lower cost of borrowing. This is because, unlike traditional lenders, he is not required to pay high intermediation fees as he is in direct contact with a borrower. Further, P2P Lending platforms assess the creditworthiness of an individual based on atypical parameters and take into account his future repayment capability rather than depending solely on present credentials. This makes it easier for a borrower, who has thus far been wary of taking a loan from a bank or any other formal lending institution, to get a loan

The final preparations

The loan application process for a personal loan is pretty simple, as lenders do not ask too many questions. However, one needs to be prepared with regular documentation like age proof, income proof, bank statements, IT returns and residence proof. Keeping these documents ready before making a loan application will also expedite one’s approval and disbursal process.

As is evident, getting a personal loan is not a big deal, so long as you think you have the ability and intent to make repayments on time.