1.Know your credit score before applying for personal loan
2.Research different personal loan offers to get the best deal
3.Read the fine print carefully
4.Pay your loan installment full every month
5.Borrow what you can repay
1.Submitting multiple applications to get a personal loan
2.Going for the first loan offer that comes your way
3.Partially paying your loan installment
4.Missing the due date of your loan installment
5.Asking for a loan amount as per what you want rather than what you need
6.Signing the loan-related documents without properly reading or understanding them
At the time of financial or medical emergency: Personal loans are disbursed quickly,therefore, they are best suited for financial emergencies. Since they can be used for anypurpose, you can avail it to fund big medical expenses.
1.When you wish for less documentation: To apply for personal loans, you require minimalnumber of documents. Therefore, its documentation process is simpler and faster than manyother secured loan options.
2.When you want money to fulfill multiple purposes: If you want money to fulfill multiplefinancial commitments, apply for personal loans. Unlike for many secured loans,
3.To consolidate your debts: Finding difficult to track multiple loan and credit card EMIs? Ifyes, you can consolidate them by taking a personal loan. Doing so will not only making repayingdebts easier but also will save on the interest amount.
4.When you do not have collateral: If you do not have collateral or do not wish to put yourcollateral at risk, apply for personal loans as these loans are unsecured, which implies that itdoes not require collateral.
Credit score: Your credit score reflects your creditworthiness. Therefore, lenders consider itbefore sanctioning loan application. Higher the credit score better will be your chances of gettingthe loan application approved.1.Income: Since, personal loans are unsecured loans, therefore, its eligibility criteria is morestringent than secured loans. Your income will give assurance to lenders that you will be able torepay the borrowed amount without fail. If your income is not sufficient, the lender will notapprove your loan application.
2.Employment stability: Stability is yet another important factor which gives lenders anassurance that the borrower will repay the loan on time. If the loan applicant is a job hopper thenhe/she will not get loan as lender will not have confidence whether the borrower will have steadyincome to repay the amount on time.3.Age: Most banks and NBFCs offer loan amount to people between 21 to 60 years of age. Theyounger you are, the more will be the chances of getting the loan approval.4.Outstanding debt: Personal loan approval also depends on whether you already have anoutstanding debt or not. If you have an outstanding debt, then the lender might reject your loanapplication or might approve loan of a lesser amount.Factors that Affect Personal Loan Interest RateDifferent banks and non-banking financial companies offer different interest rates for personalloans. As of now personal loans are available in India from 10.99% onwards. The rate of interestapplicable to a specific person depends on various factors.
1.Credit History: Your credit history helps lenders analyse your repayment behaviour. If youhave a poor credit history, you will get personal loan at higher interest rates.2.Income: For lenders your income is an assurance of repayment. Therefore, the more you earn,lesser will be your personal loan interest rate.3.Employer: When examining your loan application, lenders also consider the reputation of the organization you work with. You can enjoy lower interest rates on personal loans if you areassociated with a well-known and stable organization.4.Lender-customer Relationship: If you are planning to apply for personal loan with the bankyou have an account with, your good relationship with your lender can also help in getting youlower personal loan interest rates.In addition to the rate of interest, borrowers must also consider other charges such as pre-processing fees, foreclosure charges, etc. before applying for personal loan.