Availing a personal loan is a smooth and swift process if you fit the eligibility criteria and have the necessary documentation. Primarily, before approving your credit application, lenders will check your credit history, credit score, income, etc.
Therefore, before you opt for a personal loan, you need to familiarize yourself with all its aspects and also check your eligibility. In addition, several lenders offer personal loan EMI calculators to help you calculate your loans beforehand. So, to learn more about these features, please keep reading.
Factors to Consider Before Securing a Personal Loan
Before securing a personal loan, here are a few factors associated with this type of credit that you must keep in mind:
Compare Lenders to Choose the Right One
Several financial institutions provide attractive offers and rates on personal loans. Instead of jumping at the first offer you come across, take time to research each lender to weigh between the interest rates, processing charges and other factors.
Keep Necessary Documents Ready
You must provide the necessary paperwork when applying for a personal loan, just like any other type of loan. The majority of top lenders require you to submit documentation of your identity, income, and most recent bank statement while processing. Therefore, your first application procedure will go much more smoothly if all necessary paperwork is gathered and ready to submit simultaneously.
Assess the Types of Interest Rate
Today, a large number of lending institutions provide personal loans. Flat interest rates are a common way for lenders to attract potential customers. A flat rate, however, may not be very valuable to you because it ignores the influence of the market. As a result, your final cost in the form of the interest component may be greater. Therefore, you must always carefully assess the interest component before you accept the terms of a personal loan.
Evaluate the Processing and Other Charges
There are a few charges associated with personal loans that will go towards the processing costs. These include things like processing, prepayment, and foreclosure charges. So, before applying for a personal loan, you should be fully informed of these expenses because failing to do so could result in serious future inconveniences for you.
Consider Your Liabilities
Although a personal loan can serve as an emergency fund, you must also consider your existing debt. Having any other kind of loan or credit account can affect your debt-to-income ratio. Taking out a personal loan will only lead to you becoming further indebted. Moreover, it will also negatively affect your credit status. Therefore, the debt-to-income ratio should be less than 30% before applying for a personal loan.
Plan Out the Repayment
You should decide on a repayment plan prior to applying for a personal loan. To determine the sum due for a specific loan amount, you can use the personal loan calculator that is accessible on the websites of numerous lenders. Simply input your desired borrowing amount, the interest rate, and the loan term. The due amount will be instantly generated by the system as EMI. You can successfully organise your personal loan repayment schedule by becoming knowledgeable about the payable amounts.
Improve Your Eligibility for Loan
To ensure your loan application gets approved in one go, work to improve your eligibility. There are several ways to do so, such as increasing your credit score by paying off outstanding dues and loans. Add additional income sources, if you have any, to show you are a capable and stable candidate. Moreover, refrain from submitting multiple applications.
Furthermore, with the help of a personal loan eligibility calculator, you can compute how much credit you are eligible for beforehand. This will help you save time and find the right lender that meets your credit requirements.
Who Are Eligible for a Personal Loan?
Personal loan eligibility criteria include the following:
- Age Limit: 21 – 68 years
- Minimum Monthly Income: 10,000 and above
- Profession: Salaried or Self-employed Professionals such as teachers, doctors, architects, CA, etc.
- Credit Score: Above 750
Documents Required to Apply for a Personal Loan!
The documents you need to show to acquire a personal loan include the following:
- Identity proof such as passport, Aadhaar card, voter ID card, etc.
- Proof of Income, including Form 16, salary slips, bank statements, income tax certificate, etc.
- Proof of your residence such as house registration certificate, sales deed, Voter ID card, Aadhaar card, etc.
- PAN card
Finally, attractive personal loan offers make it easy to get drawn in. However, check all the terms and conditions to avoid application rejection. Your financial plans may be affected if you don’t carefully analyse these circumstances.
The above-mentioned considerations are essentially what you should bear in mind as a first-time borrower. This, along with tools such as the personal loan EMI calculator, will go a long way toward ensuring that you have a favourable credit experience and that you can access money whenever you need it.
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