Taking a personal loan is a solution for several people who want to fund a personal expense, such as pay for a holiday. If you are a judicial borrower and do your research well in advance of taking a personal loan, you can be smart about managing your loan. When you apply for a personal loan, you should be sure about certain aspects, the loan amount, for instance. Additionally, you should try to choose interest rates that suit you and which you will be able to repay with the EMIs on your loan.
About Personal Loans
A personal loan is an unsecured loan without collateral. You have to select a loan amount and repay the loan amount to lenders in EMIs along with interest. The interest that a lender charges a borrower depends on personal loan eligibility of the borrower. Lenders wish to be assured that personal loans can be paid back on time, and in full. Furthermore, if you display good creditworthiness, lenders will sanction high personal loan amounts with low interest rates as they are sure you can make good on your loan. Loan amounts are available upto Rs. 25 Lakhs and interest rates start at 14%. In order to be a smart borrower, you should first know about your loan eligibility.
Eligibility Criteria for a Personal Loan
If you want to apply for a personal loan, you must meet the following eligibility criteria:
- You must be 21 to 60 years of age and an Indian resident.
- You must have a source of income – salaried or self-employed.
- You must have a good credit score, at least 700. Your credit score is a summary of your credit profile, telling lenders about your financial health.
You can take a personal loan online these days, and most bank and NBFC websites have electronic personal loan eligibility calculators that aid you in knowing whether you meet eligibility criteria. All you have to do is enter personal details and know if you are eligible.
5 Tips to Make You a Smart Borrower
The moment you know about personal loan eligibility, you can consider how to be a smart borrower. Here are some tips:
- Maintain a Good Credit Score – Have a good credit profile with a good credit score, so lenders offer you the best incentives on loans like low interest rates.
- Avoid Multiple Loan Applications – Applying to multiple lenders for a personal loan dims your opportunity to avail a loan, sending out a message that you are desperate for a loan.
- Choose an Appropriate Loan Amount – Make sure you don’t borrow more than you require, or else you will unnecessarily have to pay more interest. Furthermore, borrow only the amount you are able to repay easily.
- Make Regular Payments – It’s not a good idea to delay EMI payments, as you will only end up paying extra charges and accumulating debt.
- Compare Loans – Do your research well and compare loans from several lenders before you apply for a personal loan.
Be a Smart Borrower
Personal loan eligibility criteria isn’t a challenge to fulfil and this is the crux of you being a smart borrower. You must ensure that you can pay back loans on time and never fall into a debt trap.