Personal loan: Want to borrow money on low salary? Make note of these 5 points | Mint
Source: Live Mint
If you are planning to raise a personal loan and have a low salary, you don’t need to fret! You can still apply for a personal loan. Most banks offer personal loans to the borrowers who draw a lower salary, however this is subject to certain conditions.
Before going further, let us recall the key reasons for raising a personal loan. One could raise a loan for a slew of purposes which range from organising a function, or renovation at home, buying an expensive item for a loved one or for a vacation, among others.
If you are planning to apply for a personal loan, you must make sure that you meet the eligibility criteria. Some banks have an income threshold, which may disqualify you from applying for a loan.
Before you apply for a personal loan, make note of these points:
1. Loan Amount: You could raise a small amount to repay the loan in smaller installments. If you have a low income, you may qualify for a smaller loan amount. When you choose a longer tenure, you can reduce your monthly instalment, thus making it more manageable.
2. Co-applicant: It is recommended to add a guarantor or co-applicant with a higher income or better credit score to raise the chances of approval.
3. High credit score: If you have a good credit score (for instance, 700 or above), it can improve your chances of approval and secure better interest rates.
4. Employer’s reputation: If you work for a reputed company, it is seen favourably even when you draw a low salary.
5. Debt-to-income ratio: By keeping your existing debts low raises your eligibility. So, you should aim for a debt-to-income ratio of less than 40 percent. This means if your salary is ₹one lakh, your loan EMI should be lower than ₹40,000.
To improve your chances, you can to take these steps:
1. First of all, you are supposed to save consistently to demonstrate financial discipline.
2. You should apply for smaller loans and repay them on time. This will help you build credibility.
3. Finally, you need to explore more on comparing terms and conditions of different banks to find the one which fits your financial situation.
