A personal loan for salaried employees has become considerably popular owing to its versatility, helping working professionals address varied financial expenses and materialise their different aims and goals. Moreover, owing to their job security, they are offered preferential interest rates on the loan amount.
However, before availing of a personal loan, individuals must know certain tips and tricks to streamline the application process.
Remember 5 tips for salaried individuals before availing a personal loan
Before availing of a personal loan, borrowers should compare lenders and settle for the one extending affordable interest rates and the best loan terms. Besides choosing the right lender, borrowers should also factor in the following tips:
- Meet eligibility criteria
Borrowers must strictly abide by the following eligibility norms set by lenders before applying for a personal loan for salaried employees.
- Applicants must be residing Indians.
- Salaried individuals must belong from the age bracket of 21 years to 67 years.
- Must have a CIBIL score of 750 and above.
Besides adhering to the eligibility criteria, borrowers should keep the following documents in order.
- KYC papers
- Employment proof
- Proof of address
- Income proof
- Income tax return
- Salary slips
- Bank account statements
- Maintain a healthy CIBIL score
As lenders do not have any collateral to fall back on, they scrutinise borrowers’ credit scores to get clarity regarding their repayment capacities. A credit score is the numerical summary of a borrower’s creditworthiness. Borrowers a decent score makes them low-risk borrowers with a lower chance of defaulting on their EMI amounts.
Paying the EMIs on time, clearing existing dues, etc., helps borrowers boost their CIBIL scores, which in turn helps them fetch an attractive interest rate on the loan amount.
- Keep away from multiple loan options
Borrowers with too many citations of loan enquiries in their credit report are considered desperate for funds, leading to rejection of loan applications or charged a higher interest rate. Moreover, outstanding debts have an adverse effect on a borrower’s credit history. Every hard enquiry negatively impacts one’s credit score. Hence, borrowers should avoid applying for multiple credit options at a time.
- Show income stability
Lenders prefer borrowers with a steady flow of income and fewer financial obligations. Salaried individuals employed in a reputed firm with a long employment history are also bestowed better loan terms.
This is why borrowers should include their additional source of income, including rental earnings, investments or any part-time work. Ancillary earning sources suggest higher repayment potentials.
- Check hidden costs
Besides considering the interest rate, borrowers should also weigh in other hidden costs like processing fees, late EMI payment penalty, prepayment penalty, etc. These additional charges contribute to the cost of borrowing and add to the repayment burden.
Knowing about these charges helps borrowers make an informed decision and plan their finances accordingly. In this regard, knowing how to use an emi calculator for personal loan will help borrowers plan their repayments even better as they can view the impact of the hidden charges and interest rates on the EMI amount.
Furthermore, borrowers must try to reduce their debt-to-income ratio.
Benefits of availing a personal loan
A personal loan or emergency loan bestows borrowers with multiple benefits:
- Rapid disbursal: Being an unsecured credit option, it does not involve property verification or a hefty documentation process; hence loan amount is disbursed in a minimum time. In this context, borrowers should know how the disbursal process for a personal loan works to get better clarity.
- Flexible repayment term: Borrowers are also offered an extended repayment frame of 60 months that helps them repay the loan amount with ease. However, borrowers should find the right personal loan tenor as it significantly impacts the interest rate.
- No-end use restrictions: One of the notable benefits of availing a personal loan is the flexibility in the usage of the loan amount. Borrowers can use it to fund their child’s education, manage wedding expenses, medical exigencies, etc., with utmost convenience.
Moreover, with booming digitisation, borrowers can easily borrow money online and track their loan status 24X7.
Besides applying for a personal loan online, borrowers can also opt for convenient loan payment methods like auto debit facility, online payment options, etc., to repay the borrowed loan principal.
Moreover, borrowers should also check out the exclusive pre-approved offers extended by several leading financial institutions like Bajaj Finserv on various financial products like personal loans, business loans, credit cards, etc. These offers ensure an expedited loan application process. Willing borrowers can check their pre-approved offers by entering their names and contact numbers.
To sum up, personal loan for salaried employees helps working individual tide over high-end purchases or easily mitigate any financial gap. It is a viable financing option that is preferred because of its easy-to-meet eligibility criteria and instant accessibility of funds. However, borrowers should be well versed with the tips mentioned above to make the borrowing functional.