Getting a loan is becoming one of the most preferred forms of funding in India. Whether it is a sudden emergency or you need to make a big purchase that is inevitable, an instant personal loan for salaried individuals from a reliable online lender like KreditBee can come in handy to fulfil your immediate financial needs that can’t be managed with your monthly salary alone. Not only is the process super convenient and 100% online with hassle-free documentation, but the entire approval process also takes just about 10 minutes! That said, there are also several other lenders that you can choose from.
No matter where you choose to borrow, applying for a loan requires careful consideration and planning. If you are a salaried individual looking to apply for an instant personal loan, there are various factors that you need to keep in mind. In this article, we will discuss some useful tips to help you make an informed decision while applying. So, let’s get started!
5 Factors to Keep in Mind to Get a Personal Loan for Salaried Individuals
A personal loan is one of the most convenient financial products to ever exist! As a salaried individual, this type of loan is perfect as you can easily purchase an item without causing a hole in your wallet or pushing back your dream purchases. But how do you get this loan without falling into a debt trap or adopting the habit of borrowing?
Here are five essential factors to consider:
Maintain Your Credit Score
The first and foremost thing to remember before you want to get a personal loan on your favourable terms and conditions is to maintain a good credit score. Everything, from your loan repayment history to debt-to-income ratio and credit utilisation, matters when it comes to keeping a great credit score. And with a good credit score, you can (in most cases) enjoy faster personal loan approvals for salaried individuals and lower interest rate options.
A credit score, or a CIBIL score in India, is a three-digit number ranging from 300 to 900, where lenders consider 750 above a good score. But how do you maintain an excellent credit score? Here are a few points to help you:
- Pay the entire credit card bill instead of the outstanding amount only
- Make timely EMI repayments of your existing loans or credit card bills
- Remember not to utilise more than 30 to 40% of the total credit of your credit limit
Don’t Apply for Multiple Loans at the Same Time
While the idea of applying for multiple personal loans simultaneously to ensure you have one option ready if someone rejects your loan application may seem appealing, it is important to understand that applying for several loans simultaneously can have serious consequences. The process of credit evaluation often involves checking your credit report and history, which can negatively affect your credit score if done too frequently.
Moreover, multiple loan applications within a short period can signal financial desperation or instability to potential lenders. This could lead to rejection or higher interest rates on approved loan applications. Additionally, managing multiple loans simultaneously can increase the risk of defaulting on payments or missing due dates.
It is important to note that every loan application enquiry shows up on your credit report and affects your overall credit score.
Mention Every Source of Income
A lender is more likely to accept your personal loan application for salaried individuals if they are sure that you will repay them on the decided time with interest. Hence, if you have multiple ways to earn income, it’s always a good idea to include all those sources in your loan application for faster approval.
For example, apart from your daytime job, if you work freelance or part-time, show the lender these sources of income so that they can be assured you can repay them the debt.
Remember the Importance of Your Employer
Apart from you, even your employer matters when applying for a loan. This is because a lender would want to know the security of your job to ensure their payments are on time, especially when the personal loan you have applied for is collateral-free.
If you are employed in a good position and a reputed company, you can enjoy personal loans with benefits such as low-interest rates and better tenure choices. Lenders consider well-reputed employees in a good position as credible people with little fear of losing their jobs. This assures them that the candidate won’t default.
Employees working in a lower position with a company not recognised can still get a personal loan, but the terms won’t be favourable, for example, higher interest rates.
Keep Your Debt-to-income Ratio Minimal
In order to get a personal loan as a salaried individual, it is necessary to reduce your debt-to-income ratio, as the higher this ratio is, the more you are labelled to be credit hungry. Lenders run away from individuals who carry even a small percentage of defaulting risk, and individuals with high debt-to-income ratios fall into this category.
A good way to ensure you get your personal loan approved is by not exceeding 30% to 40% of your monthly income towards the repayment of EMIs. The concept is simple – the more salary you give away in debt repayment, the higher you are considered a risky applicant.
When armed with these tips, a salaried individual can get a personal loan on their terms without having to face rejections. So, if you are considering applying for one, keep these points in mind, and once you get your desired loan, make sure you focus all your energies on getting that loan paid off in time.
About The Author
Tanvi Kaushik specializes in Content Marketing and works with the Digital Team at KreditBee – India’s fastest personal loan platform where self-employed and salaried professionals can easily avail of personal loans in just a few minutes when in need of quick funds. Tanvi writes to-the-point articles on personal finance and budgeting which are truly appreciated by her readers. She is committed to making money matters easy to understand even for the layman. Her commitment to her work doesn’t stop her from pursuing her hobbies of hiking, trekking and going on adventurous trips.