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How to Get a Small Personal Loan Without Collateral?

Published on Sept 25, 2024Updated on Sept 26, 2024

How to Get a Small Personal Loan Without Collateral?

Collateral-free personal loans, commonly referred to as unsecured loans, are becoming increasingly popular in India. After all, the idea of taking a small personal loan without collateral can be appealing to anyone who doesn’t want to risk their valuable assets such as cars or properties.

However, you have to meet certain criteria to apply for a personal loan without security. Due to the absence of collateral, lenders evaluate several factors such as your creditworthiness and income to determine approval and loan terms.

Let’s take a look at some practical tips that can help you solidify your chances of securing a small personal loan without collateral.

Tips on Securing a Small Personal Loan Without Collateral

Keeping the following aspects in mind can help you achieve a small personal loan without collateral and secure interest rates that do not strain your finances:

1.Boost Your Credit Score

If you want your personal loan without assets to be approved with favourable terms, you have to give lenders confidence that you are capable of paying back the loan on time.

By summarising your credit history and payment habits, a strong credit score reflects a lower risk of missed payments or a loan default. Paying credit card dues and EMIs on time, keeping credit utilisation up to 30% of the available limit, and maintaining a good mix of secured and unsecured credit are some of the best ways of improving your credit score.

A credit score of 750 and above will increase your chances of getting a no-collateral loan with favourable interest rates and repayment options.

2.Don’t Apply for Multiple Loans at Once

A common misconception is that applying at multiple lending institutions simultaneously can improve the approval chances for a personal loan without collateral. Applying to several lenders at once means that multiple parties will conduct a hard inquiry on your credit report. Several hard inquiries in a short period can negatively impact your credit score, reducing your chances of approval.

You should research the firm you want to take a personal loan without collateral from before applying to prevent this issue. Understand their unsecured loan options, eligibility criteria, interest rates, and other loan terms to see whether they align with your needs.

In case your small unsecured loan request doesn’t get approved, you can connect with another lender after about 6 months to ensure that your credit score doesn’t take a hit.

3.Maintain a Good Employment History

A consistent employment history can increase your chances of obtaining a personal loan without collateral. It indicates your ability to earn a steady income, increasing lender confidence in your repayment capacity.

Your salary slips, income tax returns, and bank statements act as a testament to the fact that you can pay back a small loan without security.

You should tell the lender about all your sources of income, including business and rental income, to enhance your chances for an unsecured personal loan.

Conclusion

Following the tips mentioned above can help boost the chances of your request approval if you are looking for a small personal loan without collateral. For transparent loan processing without hidden fees, quick disbursal times of 30 minutes* within approval, and dedicated customer support, consider SMFG India Credit. We offer unsecured personal loans of up to INR 30 lakhs* at interest rates starting at only 13%* per annum. Check out our eligibility criteria and apply online from the comfort of your home!

*The final approval, loan amount, and interest rates will depend on several factors including the lender’s policy at the time of loan application.

* Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG India Credit. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG India Credit's policy at the time of loan application. If you wish to know more about our products and services, please contact us

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