Taking a loan has become easier today. There are different loans available to cater to multiple needs. A personal loan is one such multi-purpose loan that acts as a helping hand to fulfil your financial needs.
Lenders usually issue them without any collateral submission. Hence, it poses a higher risk for them. Thus, they consider various parameters while processing your loan application. It is best to understand these before you apply for personal loan. The factors are as follows:
Age: Lenders inspect your age to decide the number of years you need to repay the instant personal loan. They usually prefer people with the age range of 21 to 50 years having sufficient working experience. It is because people aged above 50 years have less time and resources to pay back the loan. They look for people who are younger and have good financial standing.
Credit history: You qualify for the loan only with a credit score of 750 or above. It is because it reflects your financial habits in the past. Lenders learn a lot about your past repayment patterns from your debts. It serves as a good judge of your repaying capacity. Hence, it is best to get your credit history checked before you opt for the loan.
Other debts: If you have existing debts, your financial responsibilitygets saturated. As a result, your repaying capacity for personal loans gets compromised. Hence, lenders consider your other obligations during the application process. It is the deciding factor for your interest rates, loan tenure, and EMIs. Therefore, it is best to clear all your debts before opting to take these loans.
Repaying capability: Your credit history tells a lot about your previous financial activities. The lenders check this to know how you dealt with your previous debts. It gives them an idea of your repayment capacity to decide the loan approval. They also appreciate it when you opt for shorter loan tenure as it ensures swift repayment. You get a lower personal loan interest rate for the same.
Collateral and down payment: Normally, lenders offer these as unsecured. However, you can opt for secured personal loans online against your liquid assets. It helps reduce the interest rate on loan. The surety you offer determines your loan tenure, interest rate, etc. Your down payment contribution also helps reduce the burden of the loan. Hence, it is best to apply when you have sufficient corpus to contribute.
Income and employment: The interest rate gets usually decided based on your earnings. Hence, your income becomes a vital eligibility criterion while doingan online personal loan assessment. Payslips and profit and loss statement are income proof for the salaried and self-employed person, respectively. The duration and kind of employment you have also play a crucial role. It helps the lenders understand your financial standing.
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