Planning to take a personal loan? You should certainly be aware of a few vital aspects before applying. Personal loans are unsecured loans, i.e. those that do not require any collateral/security and are easier to obtain in comparison to other regular loans like home loans or car loans. It is simpler to apply for personal loans in recent times since you can easily apply online with most lenders.
However, you should always keep personal loan eligibility in mind before applying. Several lenders also provide eligibility calculators which help you find the amount that you are eligible for. There are certain documents required for personal loans that you also have to provide and these include KYC documents, income proof, bank statements and employment proof documents. The personal loan interest rates vary across lenders and you should carefully compare financial institutions before taking the final decision. Personal loans come in handy for taking care of diverse requirements right from higher education of children and weddings to home renovation, medical emergencies, vacations and so on.
Here are the 5 things that you should know before applying for a personal loan:
- Monthly Income– Every financial institution will have a minimum requirement in terms of monthly income whether you are employed or currently unemployed. This requirement has to be met while the lender will also assess whether you earn enough to repay the personal loan in a timely manner.
- CIBIL Score– The CIBIL score is also assessed while considering a personal loan application and this is the figure assigned to every individual based on his/her creditworthiness. This is considered by financial institutions before deciding whether to approve a particular application or not. The CIBIL score number is given on the basis of the financial behavior of the customer which is ascertained through data provided by lenders and other financial institutions. Financial behavior encompasses long-standing dues, loan repayments, credit card payments and other debts.
- Relation With the Lender– If you already have a relationship with a bank or NBFC, this automatically gives your personal loan application higher chances of approval.
- Employment Status– Lenders will look for a stable employment history and status while sanctioning a personal loan. They will also scan the company where the applicant is employed. Working in a good company increases one’s chances of getting the loan application approved.
- Other Liabilities– Lenders will also consider other liabilities that you have including loans from friends and family members, pending payments/dues and so on.