The personal loan segment continued its impressive performance in 2021, registering a 12.6% growth in April 2021. The ease of access, along with quick processing, makes such loans a favourite among consumers.
Individuals looking for an instant personal loan in Udaipur should bolster their application by understanding a few factors related to such credits. Following a few healthy practices can minimise credit rejection chances significantly.
Personal loans: Things you must know
Firstly, you should know that personal loans are unsecured forms of credit, which means you do not need to collateralise an asset against the acquired sum. While this eases the application process considerably, it also leads to stringent eligibility norms.
Here is what one should know about a personal loan before applying –
- Strict eligibility parameters
Lenders are exceptionally strict when it comes to the eligibility criteria for an instant personal loan in Udaipur or anywhere else in India. Since there is no underlying security, such eligibility checks reduce delinquency rates. If you are planning to avail of a personal loan soon, make sure you have a healthy credit score, a sizable income and proper employment.
The first parameter is the most important. A CIBIL or credit score of 750 or more is mandatory to qualify for a personal loan from most reputed financial institutions. While it is possible to get a loan when you have a bad CIBIL score, the terms involved in these cases would be disadvantageous for the borrower.
- Interest rates higher than secured credits
Once again, due to the absence of underlying collateral, lenders charge higher interest on personal loans when compared to secured debts. Doing so allows them to mitigate some of the inherent risks related to NPA. Borrowers must always use an interest calculator online to determine EMIs for their chosen personal loan.
Such tools are also useful when comparing rates from various NBFCs. As a result, a borrower can quickly and accurately form an idea regarding his/her monthly liabilities while also understanding the total interest cost involved.
- Flexible tenor
Lenders provide an extent of freedom to borrowers to choose their repayment tenor. Increasing the tenor can reduce monthly liabilities and vice versa. Keep in mind that total interest payable also increases with an increase in loan tenor.
This is yet another situation where one must use a personal loan calculator before deciding. Simply change the tenor range to notice how it affects your monthly instalment amount.
- Keep your fixed obligation to income ratio in check
FOIR refers to the ratio of your monthly liabilities to your monthly income. If this ratio crosses 40%, i.e. if more than 40% of your earnings go toward paying off existing debts, opting for a personal loan may not be the best idea. Your instant personal loan in Udaipur may face rejection if this FOIR is too high.
Thus, the best thing to do is to pay off existing dues before opting for fresh credit.
- Documentation is an important process
Whether you are applying for a loan online or offline, submitting the necessary documents is crucial. KYC, income proof and other documents are some of the commonly needed pieces of paperwork when availing unsecured credit. Therefore, one should enquire about it beforehand to enjoy a seamless application.
- Look for pre-approved offers
Existing customers with impressive credit ratings are often eligible for personalised loans through pre-approved offers. Pre-approved offers from lenders like Bajaj Finserv ensure a streamlined loan application. Business loans and personal loans are some of the financial products where such offers are valid. You can check your pre-approved offers by submitting just a few details. Personalised offerings are the key to availing of an instant personal loan in Udaipur.
Personal loan repayment becomes simpler when a borrower is aware of the factors listed above. Such knowledge on instant personal loans in Udaipur or any part of India can also minimise confusion related to borrowing, allowing one to choose the best possible deal.