Habits that increase your eligibility for a Personal Loan
Rahul Mehra and Piyush Singh worked as IT consultants in Ahmedabad. They were college friends and had ended up in the same company after college recruitment. They had both worked hard for two years, and both had decided to buy a car to make travel easier and more convenient. Rahul was looking for financing options that would give him funds without pledging any security as collateral and Piyush asked him to consider applying for a personal loan. After doing some research, they realised that the most important thing to do is check their personal loan eligibility before proceeding any further.
While Piyush was eligible for a higher personal loan amount and a lower interest, Rahul found that his interest was higher. Even though they were both in the same salary bracket, they had received different interest rates on their loan. Why?
Piyush explained to Rahul that it was his financial habits that had proved him to be a better risk for the lender. Rahul too wanted to avail of a lower personal loan interest and vowed to inculcate habits that would increase his personal loan eligibility. He followed Piyush’s advice, and in 1 year, Rahul rechecked his personal loan eligibility and saw a drastic improvement. His personal loan interest was now lower than before!
Like Rahul, if you want to apply for a personal loan at low interest, it is important to understand the factors that determine the success of your loan application. Read on for more.
Habits to Improve your Personal Loan Eligibility
Following certain healthy habits can improve your personal loan eligibility thus decreasing the interest on your personal loan.
Have Clear Estimate of your Salary and Monthly Spends:
It is important for you to have a clear record of your income. Check your bank statements, salary slips and more. Also make a note of your monthly expenses, separating fixed expenses (such as rent, household expenses and groceries, etc.) with other expenses such as entertainment. You should only consider applying for a personal loan when you have calculated this and feel that your income would enable you to make timely EMI payments.
Save Money and Spend Less:
From all your earnings it is important to save a fair sum for emergencies. In today’s growing trend of retail therapy and online shopping it has become a norm for people to spend large amounts of their earnings on unnecessary indulgences. However, you should balance your desires with savings, which come in handy when you seek to repay a loan or during other contingencies.
Have Backup Funds:
When borrowing a personal loan, it is important to keep some money separate as backup. This could be done perhaps by investing in FDs or equity. This will help you have a source of financing when need arises or when you need to repay a loan and find yourself short on funds.
Maintain Good Credit:
A good credit score or CIBIL score play a huge role in increasing your personal loan eligibility and securing a lower interest rate. A good credit score can be achieved by making timely EMI payments, repaying existing loans in the given tenor, reducing credit card usage, etc.
Monitor Your Expenditure with a keen Eye:
Expenses tend to grow out of control as you often end up spending money on unnecessary products. Learn to spend only when necessary and prepare a budget as a means of monitoring your expenses. Make sure you include holidays and certain other sources of entertainment into your budget to achieve a good work life balance. A budget will help you achieve your goals of how much you wish to spend in a given time frame. Once that budget is reached you must ensure you do not cross the amount. This can help you control your expenses better.
Putting these simple precautions into place can help increase your personal loan eligibility, and can ensure that you can borrow a personal loan easily and at lower interest.