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How to enhance your personal loan eligibility chances?

by Sonal Shukla

Kotak Personal Loan, Personal Loan Eligibility

 

Kotak personal loan or personal loan offered by other lenders is one of the preferred loan choices for those facing urgent fund shortages. Kotak personal loans or other personal loans require minimal paperwork, immediate disbursal, have zero security requirement and come with no restriction on fund end usage. However, a personal loan’s unsecured nature requires lenders to hold caution when evaluating the applicant’s application for a personal loan. 

 

Apart from mitigating emergency linked expenditures, one can also refinance their high-interest credit or opt for consolidating their multiple debts with the low-interest rate personal loans. You can also fill up a form online on the lender’s website to get instant access to cash according to your need. 

 

Various lenders have different terms and conditions, which in turn affect the amount that one needs to repay. Thus, before apply for Kotak personal loan or personal loan offered by other lenders, ensure to strike a comparison among the offers available to you to get the best deal.

 

Here are 4 important parameters that lenders consider for evaluating the borrower’s personal loan eligibility: 

 

Credit score

 

This is a vital parameter that lenders like Kotak Mahindra Bank offering Kotak personal loans consider evaluating the personal loan application. Those having a credit score equivalent to 750 and above are considered credible and hold higher chances of getting their personal loan approved. Some of the lenders also provide personal loans at preferential interest rates to those with a higher credit score. On the other hand, those with lower scores of below 750 are usually those who lack credit discipline and lenders may reject their personal loan application or charge a higher personal loan interest rate to compensate for the higher involvement of credit risk. 

 

As the requirement for a personal loan can hit anytime, a review of your credit report just before applying for Kotak personal loan or any other personal loan may not prove useful. In place, you should build the habit of checking your credit report periodically. Doing so gives you the needed time to take the right steps to improve your score. Adopting healthy financial practices like timely repayment of your credit card outstanding bills and loan EMIs, keeping credit utilization ratio or CUR of up to 30 %, monitoring timely your guaranteed and co-signed loans, avoiding repetitive loan applications or credit card applications in a short duration etc. helps at maintaining and ameliorating your credit score. 

 

Checking your credit report regularly can even help to timely identify any clerical issue or mistake in your report, which you can report to the concerned lender, issuer or credit bureau on time for rectification. A rectified credit report can enhance your score automatically, which further helps to boost your personal loan eligibility prospect not just for Kotak personal loans but personal loans offered by other lenders. 

 

Personal loan EMI repayment capacity

 

Like any other loan, lenders like Kotak Mahindra bank, when approving your Kotak personal loan, factor in your repayment capacity when evaluating your application for a personal loan. Generally, lenders like Kotak Mahindra bank for their Kotak personal loan or other personal loan lenders require the loan applicants’ monthly obligation for repayment obligation involving their new and existing loan EMIs to be within 50 to 60 % of their monthly income. Those exceeding this set limit usually have lower chances of getting approval for their personal loan application. As longer tenures lead to lower loan EMIs, those exceeding this limit of 50 – 60% must select longer loan tenures to enhance their repayment by reducing their monthly EMIs. 

 

Existing relationship with the financial institutions

 

There are many lenders that offer pre-approved offers on personal loans at a preferential interest rate to their existing customers. These relationships can be in the form of current, savings, fixed or recurring deposit, salary account etc. Thus, those considering to avail personal loan should begin their search by approaching their financial institutions like banks or NBFCs directly along with whom they already share an existing banking or lending relationship. The rate of interest offered by these lenders can be used as a benchmark for comparing personal loan interest rates offered by other lenders. 

 

Employment profile

 

Lenders consider the employment profile of the applicants while approving their application for a personal loan. Also, some lenders consider it when fixing the interest rates of the applicants. Usually, lenders prefer salaried individuals over non-salaried individuals due to the enhanced income certainty of the salaried. Amongst the salaried individuals, those working with the reputed top-notch corporates or public sector employees are highly preferred over others. Similarly, amongst the non-salaried groups, professionals like doctors or chartered accountants have enhanced chances of taking up personal loan approvals. 

 

Here are a few of the crucial factors to improve your personal loan eligibility chances 

 

While numerous factors play a crucial role in determining your personal loan eligibility, one can increase their personal loan eligibility by following the below-listed tips: 

 

* Repay your credit card outstanding dues and loan EMIs in full on time: Being regular considering all your financial responsibility helps at improving your credit score, which further increases your chances of getting instant loan approvals.

 

* Reduces your existing loan debts to get your outstanding loan burden down: You can save a higher monthly income portion that can be utilized for servicing your new debt. When the lenders get to know that you have sufficient income after fulfilling your mandatory monthly income, they may approve your loan with much thought to the same.

 

* Maintain and keep your credit utilization ratio (CUR) below 30 % because it improves your credit score, which helps boost your eligibility for a personal loan. Your credit score serves as a sign of credibility, which assists lenders to understand you are responsible financially.

 

Conclusion

 

As the lender’s risk assessment process can massively vary, your personal loan eligibility, as well as your interest rates charges, can also vary widely across different lenders. Thus, make sure to enquire with different lenders regarding your personal loan eligibility. The best way to do so is to approach online financial markets, which can get you various personal loan offers based on your income, employer’s profile, credit score etc. 

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