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Sunday, May 6, 2018

How to Apply for Personal Loan

Let’s say you need funds for a personal purpose. This can be gifting your wife jewellery for your anniversary, take loan for home  renovation or taking a much needed vacation. Personal Loans are the best choice. To avail a Personal Loan shortlist lenders whose eligibility criteria you can meet.

To check your eligibility, you can use a Personal Loan eligibility calculator. It factors in your salary, age, employment status and credit score. Based on the quantum of loan and tenure, you can choose the EMI.

Qualifying Factors for A Personal Loan

You apply to a bank or NBFC for a Personal Loan. Before approving your loan, the bank considers the following;

Payment History

The lending bank can obtain your credit report from CIBIL. This Credit Information Report (CIR) gives a clear indicator if you have defaulted any payments as well as the duration of default. If default has been repeated, then the lender would give a negative marking.

Current Outstanding

The CIR also reflects what quantum of loans /dues are yet to be repaid. These represent your liabilities. Lower the current outstanding balance, better will be your chance to have your Personal Loan approved.

New Loans in the Recent Past

If you’re already saddling your monthly income with a number of EMI payments, your lender might reject your loan application. Your repayment capacity is a big cause of concern, and understandably.

Once the loan has been approved, you need to look into the interest rate on Personal Loan. Your aim would obviously be to get a low interest rate on Personal Loan. There are a couple of factors that have a say on the interest rate.


Your CIBIL score does plays a pivotal role in any type of loan that you avail. Especially with unsecured loans like a Personal Loan, your credit score can help you get attractive interest rates. If your CIBIL score is more than 750, you can be sure to get a loan which is about 0.25% to 0.50% less than the market rate.

Annual income

A higher income from a steady job indicates your capacity to repay the loan and hence banks will be more than willing to offer you a Personal Loan.

Employer Standing

Where you work also has a bearing on the Personal Loan interest rate. If you work for reputed companies, then the chances of you getting a Personal Loan at lower interest rates is very much possible.

Bank-Customer Relationship

Let’s say you’re a long standing customer of a bank, and have been maintaining good relations with them. You can get a Personal Loan at interest rates that fit your budget.

Getting a Personal Loan at a low interest rate is well within your control. Maintain financial discipline and be regular with your payments. Do not apply for multiple credit facilities. Keep your credit score high and you can easily avail a Personal Loan when you need it the most.

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