Understanding the eligibility criteria for a personal loan online can increase your chances of approval besides getting more favorable terms New Delhi, Delhi, India (NewsView) Today, one can apply for a personal loan online or instant in a few quick and easy steps since these loans are unsecured. If you meet the personal loan eligibility criteria, the instant loan could be disbursed within minutes. Therefore, such loans can be more useful in case of unforeseen events or unforeseen expenses.
Nevertheless, it is essential to remember five factors of the eligibility criteria so that your loan application is not refused. Compliance with these criteria could also guarantee you an online personal loan at relatively advantageous conditions.
1. Check Your Debt-to-Income Ratio Make sure you pay off all of your existing debt, including credit card bills, before applying for an instant personal loan. In other words, you need to reduce the debt to income ratio because lenders may be reluctant to lend if there are multiple financial obligations that are affecting your ability to repay. This ratio can be calculated by dividing the total debt by your income. It is imperative to ensure that this value remains below 50% because a higher percentage denotes a greater risk of default. As a rule of thumb, the total IMEs you are currently paying should not exceed 30 or 40% of monthly income. If not, prepay some of your debt before applying for a personal loan.
2. Improve and Maintain a Good Credit Score A good credit score is crucial because personal loans are unsecured and lenders will use it to assess your repayment capacity or your creditworthiness. Typically, a credit score of 725 and above indicates that you are a responsible borrower, while a credit rating of 800 and above is excellent, indicating that a person is a safe borrower. A score below 725 would indicate that you do not have a correct repayment history. As a result, you will be classified as a high risk borrower and your loan application could be quickly rejected. While some lenders can still give you a personal loan online, note that you will have to pay a much higher interest rate to partially offset the risk of default. Most lenders rely on CIBIL scores of between 300 and 900 points. Make sure you have a good credit rating before choosing a personal loan. You can do this by making a point of periodically checking credit scores.
3. Include all sources of income Lenders check your monthly income to understand repayment capacity. In view of this, it is important to mention all sources of monthly income, not just salary income. It can be part-time income, rental income or any other source. Unlike home, auto, or gold loans, which are backed or secured by certain guarantees, personal loans are unsecured. Therefore, lenders should be reassured about your ability to make timely repayments.
4. Avoid Applying for Multiple Loans Simultaneously If you apply for multiple loans during the same period, your financial situation will be reported to lenders. Whenever you apply for a loan, including personal loans, the lender will use extensive inquiries with the credit bureaus to estimate the risk of default. Multiple loan applications will result in many inquiries from lenders about your credit report. Hence, it will lower your credit score since you will be seen as a credit hungry customer. The lenders will then reject the loan application. Regularly checking your credit score will help you avoid such pitfalls.
5. Choose a lender with appropriate eligibility criteria Don’t randomly apply to multiple lenders hoping that one will approve your loan. Remember that different personal lenders require you to meet different types of eligibility criteria. It is best to first check your personal loan eligibility criteria with each lender and identify the one that is right for you.
For example, Clix Capital has relatively easier eligibility criteria to meet: the applicant must be between 25 and 58 years old; have a minimum monthly income of Rs. 25,000; have been working for the current employer for at least six months; and have work experience in the current field for at least 12 months. If these conditions are met, simply have your essential documents checked online and the loan application process can be completed quickly.
Essentially, understanding the requirements before applying for a loan maximizes your chances of getting approved. In addition, you could benefit from a lower interest rate and more favorable terms if you meet the eligibility standards.
About Clix Capital Clix Capital is a new era of NBFC that is revolutionizing the lending space by delivering differentiated digital lending products that are powered by technology and deep analytics. It offers a range of loan products to a diverse range of clients in the MSME and consumer segment, including personal loans, MSME loans, health care loans and mortgage finance.
Clix is co-founded by industry veterans Mr. Pramod Bhasin and Mr. Anil Chawla and is backed by a private equity fund AION Capital Partners Limited (a subsidiary of Apollo Global Management, LLC – one of largest alternative investment managers in the world with AUMs of $ 433 billion). Mr. Bhasin is the founder of Genpact and the former CEO of GE Capital India and Asia; and Mr. Chawla was the former CEO of GE Capital India and Asia’s Commercial Finance Business.
Together, Mr. Bhasin, Mr. Chawla and AION jointly acquired the commercial lending and leasing business of GE Capital India in September 2016 and renamed it Clix Capital.
For more information, please visit www.clix.capital.
(This story was not edited by Devdiscourse staff and is auto-generated from a syndicated feed.)