A personal loan is an unsecured loan for a salaried person only, typically with a tenure of 1-5 years. These are given without guarantors, or collateral, and have a variety of potential lenders ranging from banks and NBFCs.
Personal loans are generally used for one-time expenditures like weddings, travel and rental deposits.
Additionally, they can be used to consolidate or repay high-cost debt, fund medical emergencies and business investments.
There are 4 big factors that banks typically focus on. The Main is your cibil score. It should be 720 + Then, your place of employment tends to be categorized into 3 tranches, A, B or C. If, say, you work with a reputed multinational company, your eligibility is likely to be rated high. Second, your liabilities and obligations count as a risk for banks. If your total EMI obligation on existing loans, like a home loan, exceed 50-70% of your net salary, a lender will not be willing to underwrite an additional liability. Third, your gross and net salary determines your capacity to repay and therefore has a disproportionate impact on both your eligibility as well as your interest rate.
If you are applying for a personal loan, then your application must follow a few standard protocols. They are eligibility checks, credit score checks, documentation, verification, approval, and disbursement. Every lender has their own time frame that they take to approve a personal loan. After submitting your application along with your documents, it might take as many as 5-6 working days to get your loan approval and a couple of days more for disbursement.
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