Personal loans are great to rely on if it is taken for a financial purpose. There are several speculations on how personal loan is calculated. Since it is an unsecured loan, lenders have nothing but the credibility of the borrowers to depend on. Thus, there are quite a few factors that establish customers as eligible to borrow personal loans. Also, the interest rates applicable on personal loans from various lenders are comparatively lower than the other retail loans. Hence, it is often a viable option to go for one of these.
Listed below are some ‘tips’ for enhancing your eligibility for getting a personal loan. While there are a lot of these tips, the listed ones are basic and good for beginners to start with. These tips might come in handy to score a higher loan credit at lower interest rates. Some of the basic tips to know, include:
A good credit score
A good credit score is one of the pivotal requirements of getting retail loans, especially personal loans. The CIBIL credit score is thus, a necessary inclusion in a borrower’s portfolio for this allows banks and other financial institutions to decide on the former’s credibility. Additionally, defaulting as a borrower affects the credit score negatively and thus, it is important to take care of the repayments at regular intervals. A CIBIL score of 700 and above is ideal for getting a personal loan enough to satiate large expenses.
Include every source of income
It is important to note that a personal loan eligibility calculator will always take into consideration, your income. Thus, if, in your details, you are including all of your sources of income, it automatically makes you eligible for borrowing a greater amount. The sources of income can range from your salary to the rents you are earning and interests and dividends. Shoeing a higher income on your KYC further increases your credibility as a borrower and this is necessary as personal loans are largely dependent on this aspect.
Go for a long-term tenure
Personal loans distributed over long terms are essentially lighter on your pocket as compared to short term loans. This might not be so if it is a loan of 3 months with a great, good amount. Long term loans help you go easy on yourself as well as your pocket to repay the amount in time and without any default involved.
Avoid multiple loans
This is because some lenders tend to take into account all of the borrower’s ongoing loans and often reject the loan application in concern. Thus, a borrower needs to have a clear idea of his income as well as his ability to repay the loan he is going to apply for. Multiple loans tend to affect the CIBIL score negatively and also increase the financial burden on the borrower. Plus, it is always possible that a lender might reject a loan application if the borrower has previous impending loans with large amounts.
Payback the impending debts
This is one of the gravest factors that directly affect the CIBIL score. A lender has every right to decline your application for a personal loan. Thus, it is the first and foremost requirement to pay back the existing loans to avoid any backlog while applying for a fresh loan.
Apply for a joint loan
Joint loans are the ones that involve more than one borrower. Joint loans are great for enhancing the borrower’s creditworthiness. This is because if the joint loan borrowers are both earning and have a stable source. They automatically become liable for getting a large credit amount.
Low debt-earnings ratio
It is the ratio of your pending debts and your income. Most institutions have their debt-earnings ratio bar to ensure minimum hassle of the borrower while repaying the loans. It might be important to note that a lender may straightaway reject your loan application if your debts are visibly more than what your income is. It is justified for the lender to act with the slightest inch of doubt on you as a credible borrower.
Check your age and monthly income
This is one of the most pivotal factors one needs to be sure of before applying for a personal loan. Further, it is also mandatory to have your KYC and income documents as a set of proof. Along with these, you may carry your CIBIL report updated till the last repayment.