Financial Habits That Make It Easier to Get a Personal Loan
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Financial Habits That Make It Easier to Get a Personal Loan

  • Highlights

  • Clear your EMIs and bills on time

  • Avoiding using too many credit cards too often

  • Cut down on your discretionary expenses

  • Bring down your existing liabilities

A prudent mode of finance to address expected and unexpected needs, demand for personal loans has gone up by leaps by bounds over the years. Digital disruption and evolution of non-banking finance companies (NBFCs) have catalysed the growth of the personal loan space and today you can apply for these loans,in a breeze,through mobile apps.

However, not all personal loan applications are entertained. While there can be several reasons for rejection such as insufficient income, some of them, such as a poor credit score, is a result of your financial habit(s).Here are some habits that will make it easy for you to avail a personal loan.

Paying EMIs and bills on time

Paying EMIs of current loans and bills on time prevents a dip in your credit score. For lenders, credit score is a reflection of your credit worthiness. Default on EMIs or paying bills late can dent your score and throw the entire borrowing exercise off track.
While you can avail a personal loan on a low score, it will have a higher rate of interest which will push up the EMI.

Hence, as a responsible borrower, you must ensure you always pay EMIs of existing loans and other bills on time. Setting up an ECS mandate with your bank is a good way to never miss any payment.

Using too many credit cards too often

While credit cards give you an instant flush of liquidity, using too many credit cards, too often, shows you as someone who likes to live on borrowed money. Remember, when you swipe a credit card at a merchant’s point, you need to pay back the money within a stipulated time. Swiping your card(s) too often only adds to the amount and increases your liabilities.

Outstanding money on credit cards coupled with personal loan EMI every month can send your finances into a tizzy and financial institutions may perceive you as a high-risk borrower. This again might be a roadblock while availing loans.

Avoiding discretionary expenses

Financial prudence calls for distinguishing between needs and wants. Be it peer or societal pressure, often we end up spending in items which can be given a miss. Eating out often, buying high-end mobile phones in every few months, going out on vacation every weekend, etc., are all discretionary expenses that strain your finances.

Stemming frivolous expenses would result in savings that will help you manage most of your needs. In such a case, even if you need a personal loan, the amount wouldn’t be high. A low-amount loan is easier to process and procure. Also, the savings made by cutting unnecessary expenditure would help you pay the EMIs with ease.

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Reducing existing liabilities

Reducing existing liabilities incurred in form of home or car loan, goes a long way in availing a personal loan. Note that financial institutions are wary of lending borrowers sitting on a pile of debt. Prepaying big-ticket loans such as a home loan, not only reduces the EMIs but also brings down the tenor. With reduced liabilities, the chances of availing a personal loan go up by several notches.

Pre-approved offers on personal loan and others such as home loan and business loan from Bajaj Finserv make it easy to avail finance. Share your basic details to know your pre-approved offer now.

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