The personal loan segment witnessed a considerable growth of approximately 12.6% during the last year of April after an economic depression in the last 2 years. For salaried individuals, this personal loan category has always been a saviour primarily because of its multipurpose nature and quick availability of funds.
Since a substantial portion of their monthly income gets utilised to meet certain financial obligations, they inevitably seek additional funds to fulfil urgent monetary requirements. Fortunately, with the accessibility of a personal loan for salaried employees has become more convenient. However, to avail of such loans, here are some of the essential tips to follow.
5 simple tips for a personal loan for salaried employees
Since personal loans are unsecured and do not demand any collateral, there are multiple associated factors that are essential to consider when opting for such a credit facility. Furthermore, it is also important to learn about the elements that will help borrowers in getting affordable personal loan interest rates to meet professional and personal goals.
Tip 1: Maintain a healthy credit score
A good credit score is the biggest difference between application rejection and acceptance by the lender. Customers with a good credit score and repayment history will ensure quick personal loan approval and attract competitive interest rates.
To ensure quick approval of credit, borrowers need to adopt certain financial strategies like paying off existing dues on time, maintaining a lower credit utilisation ratio, not applying for multiple loans etc. Besides, borrowers need to know the ideal CIBIL score for a personal loan and try to increase it to ensure a quick loan approval.
Tip 2: Ensure employer reputation and job stability
When borrowers apply for a personal loan, their employment stability is considered. Aspects like the employer’s reputation and the total number of employment years play a significant role in getting loan approval. Working in a reputed organisation can work in favour if you want to know how to get a personal loan at a competitive interest rate. Borrowers working in good positions and drawing a considerable salary at the end of the month can ensure prompt loan applications because lenders are assured that there will be no default of EMIs.
Tip 3: Compare interest rates
Usually, interest rates differ across lenders based on the borrower’s creditworthiness. Therefore, to ensure that your monthly liabilities do not become a burden throughout the repayment burden, you can compare different interest rates offered by the lender and evaluate EMIs before selecting one. Moreover, with a good credit score, borrowers can negotiate with their preferred lenders for better interest rates and make credit affordable. Besides, you also need to know about the factors affecting personal loan interest rates and apply accordingly.
Tip 4: Select a shorter tenor
Although reputed lenders offer flexible tenor when extending the personal loan for salaried employees, it is always wise to opt for a shorter tenor to get rid of the financial liabilities at the earliest. In addition, selecting an extended tenor will make EMIs affordable but increase the interest component throughout the repayment period.
For instance, if you apply for a personal loan of Rs.15 lakh at the 5% interest rate for a repayment tenor of 5 years, EMI will be Rs.28, 307, and the overall interest component will be Rs.1, 98, 411. Now, if you decide to go for an extended tenor of 10 years, the EMI amount will get reduced to Rs.15, 910, and the payable interest will be Rs.4, 53, 169.
So, from the above evaluation, it is evident that with the change in tenor, repayment strategy and repayment amount will be higher. In this regard, borrowers can take the help of an online EMI calculator to plan their personal loan EMI repayment better.
Tip 5: Minimise debt-to-income ratio
Another tip to follow when applying for a personal loan for salaried employees is to reduce the debt-to-income ratio to a certain percentage. An individual’s debt-to-income ratio refers to the percentage that he/she needs to pay towards their monthly obligations. Therefore, one’s loan eligibility is increased when he/she pays off previous loan obligations. By doing this, one can significantly reduce their debt-to-income ratio and improve loan eligibility.
Apart from these tips, one must successfully meet the eligibility parameters and submit essential personal loan documents. By doing this, one can also enjoy the facility of pre-approved offers extended by leading financial institutions like Bajaj Finserv on a wide range of financial options, such as business loans, personal loans, credit cards, etc.
These personalised offers significantly reduce the hassle of extensive documentation and save considerable time. Therefore, intending loan borrowers can check their pre-approved offers by mentioning their names and contact details.
Therefore, to sum it up, if you are seeking a personal loan for salaried employees, ensure to check all the additional charges, penal charges, processing fees etc. and learn the terms and conditions before signing up the loan agreement