Personal loan: Many of us take personal loans to meet expenses like wedding, home renovation, higher education, holidays, medical emergencies, etc. In case of emergency, personal loan can be considered most helpful financially.
Today, personal loan has become a popular financial option in India. However, to avail a personal loan, you have to fulfill the eligibility conditions of the banks. Banks reject the applications of those who do not fulfill this. Let us know which 5 corrections you should make before applying for the loan so that your application is not rejected.
Before applying for a personal loan, make sure you have paid off existing loan and credit card bills in full to reduce your debt-to-income ratio. Your existing loan and credit card outstanding balances may present you as a credit-hungry borrower, putting you in the way of getting a new loan. Ideally, the total amount of EMI you currently pay should not exceed 30-40 percent of your monthly income. If the EMI is more than this then it should be reduced before applying for a new loan.
Since personal loans are unsecured, banks pay more attention to your credit score to determine your creditworthiness. A credit score of 725 or higher makes you a responsible borrower who makes consistent payments. As a result, banks or other financial institutions do not consider any risk in giving you loan and the chances of getting your loan application approved increases manifold. A credit score below 725 indicates that your payment record is not good and banks will immediately classify you as a high-risk borrower. Due to which your loan application will be rejected or you will be offered a loan at a higher interest rate.
Lenders also look at your income to assess your repayment capacity. Therefore, when you file the online loan application form, you should not only mention your regular salary but also all your other sources of income, like rental income, part-time income or anything like that. By doing this the bank will feel that you are earning enough income to make the payment on time.
When you apply for a loan, banks or other financial institutions check you thoroughly with credit bureaus to assess your default risks. If you apply for multiple loans at once, all the lenders will access your credit report multiple times, which will lower your credit score. They will consider you a credit hungry consumer and may even reject your loan application. It would be better if you compare banks first and apply for the one that best suits your needs.
Instead of applying for loans across multiple banks, first you should find out about the eligibility conditions of different banks and choose the bank whose eligibility conditions you can fulfill. The main eligibility conditions for a personal loan are that you should not be older, your monthly income should be more than Rs 25,000, you should be working with your current employer for at least 6 months, you should have at least 12 years of Must have experience. In your current area. Have years of experience.
