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What affects your personal loan approval?

  • Highlights

  • Your credit score determines how likely you are to repay the loan

  • Your income and city determine the amount of loan sanctioned to you

  • Having multiple debts can lead to a rejected loan application

  • A good credit score can get you a lower interest rate

Personal loans are convenient financial tools for emergencies. They can help you recover from a financial disaster or take care of large expenditures, including those related to a home renovation, a vacation, a wedding or even car repair.

Though personal loans are an easy way to get financial assistance, borrowers need to consider the following factors to get their application approved:

1. Credit score

Your credit score is probably the most important factor to consider before applying for a personal loan. This is because personal loans are unsecured, and the only way for lenders to know if they will get their money back is to check your credit score. If you have a good credit history and score, you are more likely to have your loan sanctioned. Banks are particularly strict about this and may not accept loans from borrowers with a poor credit. NBFCs are more flexible, though the interest rate they offer will be higher if you have poor credit.

A credit score of 750 or more is generally regarded as a good score and indicates a high probability of you repaying the loan.

2. Criteria for eligibility

The eligibility criteria for personal loans are not strict, but lenders need to ascertain your repayment capabilities, especially since they don’t get collateral. Your income, and even the location from where you are applying, make a difference in your application being approved. Bigger cities have a higher income limit as compared to smaller cities. Also, your salary and city of residence can determine the loan amount that would be sanctioned to you.

3. Existing debt

If you already have other loans to repay, you are less likely to get your personal loan approved. This is because with existing debt, you are less likely to be able to repay the personal loan. It is therefore important to check your debt-to-income ratio before you apply.

Applying for these loans just got even easier with pre-approved offers from Bajaj Finserv. These make it much easier to avail finance as all you need to do is share some basic information to know your exclusive pre-approved offer..

Personal loan interest rate: How is it calculated?

When calculating personal loan interest, lenders take in to account your credit score and history. The higher your score, the lower your interest rates. Moreover, most lenders offer fixed interest rates, but some also offer a floating interest rate. Since your EMIs are calculated on the basis of the principal amount, tenor, and interest rate, you pay either a fixed EMI or a changing EMI, depending on whether your interest rate is fixed or floating.

DISCLAIMER: The personal loan features mentioned in this article are subject to change, based on policy revisions. For the updated product details, please visit the Bajaj Finserv Personal Loan page here.

 

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