What is a Personal Loan?
Personal loan is an unsecured loan. It does not require an asset to be offered as a security for the lender to provide you the loan. However, to ensure that you do not face a drawback while applying for personal loan, we have come up with a list of tips that you should consider before applying for a personal loan. One must note that personal loan interest rates differ from bank to bank. They can begin from as low as 10% and go up to 37% based on the bank’s policies for interest rates and processing fees.
Meeting the Eligibility Criteria
Across most Indian banks, the minimum age of applying for a personal loan is 21 years and the maximum age is 60 years. However, some banks also allow individuals of 18 years or above to apply for a personal loan.
A Good Credit Score
Credit Score is given to any individual based on their debt to credit ratio and is calculated using credit payment and previous loan repayment figures. More is the regularity in your credit bill payments, higher is your credit score. The score ranges from 350 to 900. If your credit score is above 700, you have a higher chance of getting your loan approved. But, if you have a lower credit score, you can take a few months and complete your bill payments and dues on time to improve your score.
Choose Loan Amount Reasonably
You must apply for a loan amount reasonably after considering your repayment ability. Every bank checks your loan repayment capability based on your current income status. Hence, if you apply for a loan amount that you won’t be able to repay in the decided tenure, based on your expected savings, chances are that the bank will reject the application.
Don’t Send in Multiple Applications
If you think that applying to more banks will increase your chances of getting the loan, it is in fact the exact opposite. Banks do not prefer the applicant applying to many banks since it dilutes the possibility of the applicant choosing that specific bank.
Don’t Apply for Personal Loan While Paying Off another Loan
Make sure that you haven’t taken another loan in at least the past six months. Banks generally avoid lending money to such applicants, considering that they might not be able to take the burden of two loans at a time.
By following the above-mentioned tips, you can increase your chances of getting your personal loan approved.
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