One of the most popular and easy to get loans in the modern world is a Personal loan. During financial emergencies, it is the most sought-after option for many individuals. Today, 77% of Indian working professionals are dependent on instant personal loans to fulfil their requirements. These loans can be used for a variety of reasons, including paying off high-interest rate credit cards, car payments, consolidating multiple debts, going on an international trip or starting your own business. Let’s understand this better:
What Is A Personal Loan?
A personal loan is an unsecured loan. It does not require collateral or security and is offered with minimal documentation. The funds from this loan can be used for any financial need. The lender does not restrict the use of the funds secured via a personal loan. However, in order to get a personal loan, and find answers to how to get a personal loan, you should fulfil the eligibility criteria.
Personal Loan Eligibility Criteria
While it is pretty easy to apply for a personal loan, you still have to meet standard eligibility criteria.
1. The age limit to apply for a personal loan is 18 years to 60 years.
2. Your nationality should be Indian.
3. You should hold work experience of a minimum of 12 months.
4. You should be working with your current employer for more than 6 months, and your salary should be Rs 15,000 per month or more.
Note: The eligibility criteria for a personal loan differ from one lender to another.
How To Increase Your Chances Of Getting A Personal Loan?
Even though you fulfil the eligibility criteria, it doesn’t mean the personal loan will come easy. But, there are some factors that can help. Let’s find out:
1. Check your credit score: Improving your credit score is the first step to getting a personal loan. Your credit score determines how likely it will be for you to get approved for a loan and at what interest rate. Having good or excellent credit can make it easier for you to obtain loans, while poor or bad credit will make it harder. It’s important that you check your credit report before applying for a personal loan because there may be errors on it that need to be corrected before attempting to borrow money from a lender.
2. Get a Co-Signer if Possible: A co-signer is someone who agrees to share the responsibility of paying back your loans with you. A lender may ask for a co-signer when it’s clear that you don’t have enough income or assets to qualify for a loan on your own. The benefits of getting an unsecured personal loan with a co-signer are endless. You get access to credit even if your income isn't high enough by itself, good credit history can help build up the borrower's weak account and it's less likely that lenders will decline applications due to lack of funds, poor credit score etc. since they know someone else is willing to commit toward payment.
3. Your income and expenses. Lenders want to know if they'll be getting paid back on time and how much money they'll be making off their loan each month before giving approval. This means having good records of all sources of income as well as any expenses that might cut into those profits like rent payments or car insurance etc.
4. Avoid multiple loan applications: Applying for too many loans at a time can create a mess for you. However, we understand that during a financial emergency, it is the only option left. Still, you must avoid doing that because this can harm your credit score, and the lender can predict this as your credit-dependent behaviour.
5. Choose the lender carefully: This is actually the most crucial tip. It is always advised to study your lender. Extract all the details about them. Check their terms, interest rates and every factor that can affect the process directly or indirectly.
Conclusion
While personal loans have benefits, they also come with risks. The most common mistake that people make when applying for a personal loan is they don’t prepare a plan before they apply. That’s why, before applying for a loan, do prepare an end-to-end and strategic plan. This will help you stay on track and pay off your debt as quickly as possible. You should also save money in case of emergencies and rainy days.
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