23 NOVEMBER, 2022

Top reasons to work on your personal loan eligibility now to meet your festive mismatches

The festive season of Diwali is a time to celebrate with your loved ones and take some time off to focus on the things that truly matter. The way everyone does this is different. For you, it could mean going on a much-needed vacation or perhaps renovating your home. However, if you find your festive plans being put on pause due to financial constraints, you should look into applying for a personal loan.

A personal loan is an easy-to-apply, collateral-free loan that can be quickly approved if you meet the eligibility criteria. But before you look into what the personal loan eligibility criteria is, here’s why a personal loan is a great financing option to meet your festive mismatches.

Benefits of applying for a personal loan during the festive season

  • Exclusive offers on personal loan interest rate

During festive seasons like Diwali, most lenders offer seasonal offers or special personal loan interest rates. What this means is that you can get a personal loan at a lower interest rate, which would reduce your cost of borrowing. So, taking a personal loan during Diwali can get you a good deal. These offers are only for a limited period and hence you should make sure to work on your personal loan eligibility and apply in the required timeline.

  • Freedom to use the funds for any purpose

One of the biggest advantages of a personal loan is that there are no restrictions on the end usage of the funds disbursed. This means that whether you want to go on a vacation this Diwali with your family or upgrade the furniture in your home or buy a new gadget, you are free to do so with a personal loan. Since Diwali is an auspicious time to buy new things, it’s the perfect time to take a personal loan to upgrade your lifestyle.

  • Customisable repayment tenure

Whether you need only 12 months to repay the loan or 60 months, you have the option to choose a repayment tenure that is comfortable for you. If you opt for a shorter tenure, your Equated Monthly Instalment (EMI) amount monthly will be higher, but you will pay off the loan quickly and hence your total interest outgo will be lesser. Alternatively, you can opt for a longer repayment tenure so that the EMI amount is lower and can fit your monthly budget comfortably.

How to meet the personal loan eligibility criteria?

Now that you know the benefits of using a personal loan this Diwali, it’s important to ensure that you meet the personal loan eligibility criteria so that your loan application is approved. The two primary eligibility criteria are:

  • Credit score

Your credit score allows lenders to assess the risk of lending money to you. By checking your credit history, lenders can see whether you have been diligent in paying previous debt on time, if you have ever missed EMI payments, how much you rely on debt, etc. If you have a high credit score, above 750, then your personal loan eligibility will also be high.

  • Income status

By looking at how much income you earn monthly and how stable your employment is, lenders assess your repayment capacity. The higher your income, the better will be your personal loan eligibility. So, make sure to include income from all sources including salary, freelance income, rental income, etc.

Summing up

Before you apply for a personal loan, you can use a personal loan eligibility calculator online to get an idea of where you stand. If your eligibility is low, you can try applying for a lower loan amount. Working on improving your credit score is also usually an option. However, if you want to capitalise on festive offers on personal loan interest rates, you can try changing your loan tenure and loan amount. For instance, a lower loan amount and a longer repayment tenure may make you eligible for a personal loan even if your credit score is not too high or if your income is low.

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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.