INSUBCONTINENT EXCLUSIVE:
A personal loan is a loan taken from a bank or a non-banking financial company (NBFC) to meet personal expenses
It is unsecured as there is no need to pledge a collateral and thus carries a higher rate of interest compared to secured 'home and car'
A personal loan is sanctioned based on a combination of factors such as income, employment, credit history and repayment capacity of the
borrower.A personal loan can be utilized at discretion of the borrower
Some may opt for a personal loan to finance their travel costs and wedding expenses, while others may use the money for medical
contingencies, business ventures and home renovation.A personal loan has a tenure ranging from one to five years; shorter and longer tenures
may be allowed on a case-by-case basis
Fixed rate personal loans have fixed equity monthly instalments (EMIs), whereas floating rate personal loans have a floating rates mechanism
that changes annually or bi-annually as per the new Marginal Cost of Funds based Lending Rate (MCLR) rules.Personal loans are easier to get
in comparison to home and vehicle loans, but that does not mean that getting a personal loan is a given
It is important to tie up many ends before seeing the money in one's savings account.Maintain Good Credit ScoreThe importance of a good
credit score in getting a loan sanctioned cannot be emphasized enough as credit score measures a borrower's loan repayment ability in
terms of past credit history
An aspiring borrower should be on top of payments, making timely repayment of existing loans and instalments, and credit card dues, as
single late payment can be a blot on credit history
Higher the credit score, better are the chances of getting the loan approval
Getting a loan may be a breeze for loan applicants whose Cibil credit score exceeds 760, whereas those on the lower side can clear past debt
before re-applying for a loan.Limit outstanding debtDebt-to-income (DTI) ratio i.e
your monthly debt divided by gross monthly income is a measure of how much you can afford to borrow
The general rule of thumb is that one should not spend more than 40% of the monthly income paying off loans
Lenders want to be sure of a borrower's capacity to pay them back and thus factor the DTI ratio before deciding on a loan
application.Avoid Multiple Loan ApplicationsDon't succumb to the temptation of approaching multiple lenders in the hope of receiving that
one elusive loan as this would give a hint of desperation for a loan
The exercise of tapping multiple loans also paints a not-so-rosy picture of one's financial situation, which is an early red signal of a
You as a borrower do not want to be in such a situation
Every loan rejection leads to a decline in the credit score, making it so much more difficult to get credit in the future.Have a steady
jobPersonal income is a crucial determinant in the success of a loan approval
Lenders want to make sure that you're making enough money to pay back the loan and the income flow will remain constant in the future
Frequent job changes can make the lenders wary about a person's personal and financial steadiness
Moreover, a big decline in income or job change prior to a loan application can show a person in poor light as a responsible borrower.Don't
rush into loan applicationsIt is a good idea to retain a gap of at least 6 months between loan applications
If a loan application is rejected for whatever reason and getting a personal loan is not a matter of life and death, it makes sense to step
back before applying for a loan again
This will demonstrate that your financial health and fiscal discipline is good enough to sustain without a loan and thus better the chances
of getting a loan approval the second time.The bottom line is there is no sure-shot way of ensuring that you do that personal loan, after
But by being careful and pro-active, you can increase the chances of hearing a 'Yes' from the lender of your choice.Get Breaking news, live
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