Applying for an unsecured personal loan is one of the most convenient ways to arrange some higher amount of cash during an emergency. It is because banks, NBFCs, and other lenders process and approve loan application fast to disburse cash soon.
Applying for an unsecured personal loan also means that you don’t need to provide any collateral or security to a lender to get loan approval. Loan eligibility depends on your creditworthiness and meeting lender’s eligibility criteria.
If you have a strong CIBIL score, repayment record, and employment status, you can get the loan approval without issues.
Lenders are now more relaxed when it comes to their personal loan eligibility criteria as they want more customers to avail it.
Even though the personal loan eligibility criteria have become easy to meet, you need to be careful while applying for this financial tool.
In the same context, we are listing some vital aspects that you must consider before applying for an unsecured personal loan. Read on!
Consider these points before applying for a personal loan
- Don’t go for the first offer
You may be getting a lot of calls and emails about grabbing the unsecured personal loan at the best available rates, but you need to be careful. They may not be the best offers available and maybe to lure you into signing the loan deal. Hence, it is suggested to compare all offers on a third-party website and pick one that suits your needs the best.
2. Check out personal loan interest rates
Most of the lenders show the fixed or flat personal loan interest rates on their products rather than the actual rates. It may be done to mislead you and to make their offers attractive. For example, if a creditor is offering you a personal loan of Rs.5 lakh at a fixed rate of 8% for a tenor of 5 years, then it may cost you around 13-14%. If you are being offered a flat rate, then lower will be the tenor and higher will be the effective interest rate. Hence, always ask your lender about the effective interest rate on the unsecured personal loan.
3. What about processing fees?
Other than the personal loan interest rates, you should also have a look at the loan’s processing charges. Lenders may charge around 1-2% as the processing fee on a personal loan. It is not flat and may vary from lenders to lenders. If you have a higher credit score, you can negotiate with the finance agency to reduce or waive it off for you.
4. Your CIBIL Score
Your CIBIL score is one of the key factors that lenders will check while processing your unsecured personal loan application. Hence, if you have maintained it more than 750, then you may avail the best offers on the personal loan. People with poor credit score may get loan approval but may need to bear higher interest rates. You can maintain your CIBIL score by paying off your current and the previous loan EMIs and credit card outstanding on time.
5. Don’t make too many loan enquiries
While it is good to research before applying for the unsecured personal loan, it is not good to make many loan enquiries with many lenders at a time. Why? It will lead all lenders to pull out your CIBIL Score which will impact it negatively. Also, too many enquiries will show that you are credit hungry and it may also lead to a lower Credit Score. Hence, once you are done researching, apply to a lender with the best offers as per your needs.
6. Personal loan eligibility criteria
Another thing worth considering before applying for an unsecured personal loan is checking a lender’s eligibility criteria. As a result, you can prepare yourself for the loan application. Here are some standard personal loan eligibility criteria:
- You need to be a resident citizen of India
- You should be aged between 23-55 years
- You need to be working with an MNC, public or a private limited company
You can also use the personal loan eligibility calculator available at a lender’s website for free. It will let you know about the exact unsecured personal loan amount that you will be eligible for as per your current income.
If you are looking to apply for an unsecured personal loan in the near future, then you should consider the discussed factors before applying for it. Considering the same will help you approach the loan better prepared and also avoid rejection chances.
Bajaj Finserv also presents some fantastic pre-approved offers on multiple financial products such as personal loans, EMI finance, home loans, and beyond.
Such deals intend to assist a prospective borrower to simplify loan procedures and make it less time-consuming.
All that a potential borrower has to do is share a few of his/her basic details such as their names and mobile numbers to check out their pre-approved loan deals now.