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Expert tips you must follow when applying for a personal loan in India online
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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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A personal loan is one of the popular options to fund any of your requirements i.e., finance a necessary big-ticket purchase, consolidate your debts, mitigate your contingency expenditures and others. Typically, this loan can be repaid in flexible EMI (equated monthly instalments) over tenures ranging anywhere between 1 and 5 years.
Many tend to opt for this option as it is a less costly choice as compared to its alternative solution i.e., loan against a credit card. When compared with secured options, a personal loan provides convenient and quick loan disbursement. Additionally, you must note that a personal loan is a security-free option, so lenders usually check your profile based on parameters such as age, credit score, income, and employment history to determine your loan eligibility. Discussed here are crucial aspects you must factor in to choose the apt loan deal before you hit on the personal loan apply online button.
If your credit score on the report is 750 and above, you may be considered creditworthy by lenders and thus, you may hold higher personal loan approval chances. Having a higher score even makes you eligible to opt for a loan at preferential rates. In contrast, personal loan applications with a lower score of below 750 often may be outrightly rejected or allowed loan approval at a higher rate to make up for the higher default risk.
As the need for personal loan is generally immediate in nature, reviewing your credit profile and score just before placing the loan application is of little help. Instead, ensure to adopt the habit of periodically reviewing your credit report. Doing so gives you substantial time to take the correct steps to improve your credit score. Opting for healthy credit habits like timely credit card and loan EMI repayment, maintaining a credit utilisation ratio (CUR) of within 30%, avoiding multiple credit applications in a short span of time, closely monitoring guaranteed or co-signed loans, etc. can help improve or maintain a good score.
Regular assessment of your credit report even helps you to figure out any incorrect information or data in your report. You further can report such discrepancies to the respective lender/creditor or bureau for rectification. A rectified credit report automatically enhances your credit score and even increases your chances of availing loan approval at a lower personal loan interest rate.
Figure out why you need a personal loan and the approximate loan amount that you need. There is always a temptation to opt for a higher proceed than you need. Avoid such temptations as opting for higher proceeds often makes you incur higher personal loan interest amount.
Also, avoid hitting on the personal loan apply option if you are not opting for the proceeds according to your need. In such cases, you might be compelled to apply for a new loan or a top-up on your prevailing loan. Both such options may come across to be very costly for you. Apt calculations and assessment are the important keys here.
Once you are aware of the proceeds you need, you must ensure to check in case you are eligible for a personal loan. Note that, to qualify for a Kotak personal loan, you must be salaried in the age group of anywhere from 21 to 60 years. For a salaried professional, the minimal monthly earnings must at least be Rs 25,000 for corp borrowers, Rs 20,000 for Kotak employees and Rs 30,000 for non-corp salary borrowers. The minimal educational qualification preferred is graduation with a minimum of 1 year of work experience in the current organisation.
Like other credit options, personal loan lenders also consider your repayment potential while evaluating your loan application. Usually, lenders require your overall loan obligations on a monthly basis, including your personal loan EMI obligation, to be within 50% to 60% of your monthly earnings. Failure to meet the required limit usually means lower approval chances. Higher loan tenures lead to reduced EMI, thus if you go over the 50%-60 % limit, you must opt for a higher loan tenure to enhance your repayment potential. Doing so would lower your EMI burden and increase your personal loan eligibility chances.
Ending note
Once you have zeroed in on the preferred lender, take the help of an online personal loan EMI calculator to calculate your monthly loan repayments. Make sure that your loan repayments must be according to your cash inflows and repayment capacity. Remember that for computing your personal loan EMI on the online calculator, you must input 3 crucial details i.e., required loan amount, preferred tenure, and offered interest rate. Accordingly, you can make changes to any of the details that you have added to derive the outcome of your choice.
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