What are The Expert Suggested Tips to Enhance Your Personal Loan Eligibility?

A personal loan, whether an HDFC insta jumbo loan or Axis bank loan or a personal loan from any other lender, can help you finance planned or unplanned expenses that go beyond your financial capabilities. Whether it’s a much-needed vacation, an emergency, a home renovation, or a major event like a wedding, a personal loan can spread the expense over time, making it more manageable and affordable. Personal loans have quick disbursals, require no collateral, and you can use the funds for any purpose. So, it’s a popular financing option among borrowers.

Availing of the benefits of a personal loan might seem simple. However, you need to meet the necessary eligibility criteria set by the lenders and follow smart tips to ensure your loan application is not rejected. Here are five expert-recommended tips that can help you boost your personal loan eligibility and speed up the loan approval and disbursal process.

· Maintain a good credit score

A credit score reflects your credit history and how you have previously managed debt. Lenders use this information to assess your repayment capacity. A good credit score shows that you are a responsible borrower and may increase your chances of getting a higher loan amount with low-interest rates and a favourable tenure.

You can strengthen your credit score by following sound financial habits, such as paying off your debts on time, keeping your credit utilisation ratio under 30%, and monitoring your credit report for any inaccuracies.

· Apply for the right amount by using an online calculator

You must borrow only the amount you can afford to repay with Equated Monthly Instalments (EMIs) that fit your budget comfortably. Use a personal loan EMI calculator to estimate the monthly instalment payable and plan your finances accordingly. It’s an online tool that many lenders offer on their websites.

Just enter the loan amount, interest rate, and repayment period. After that, the calculator will show you the monthly instalments on your loan. Once you have considered the EMIs and additional fees, you can confidently click on the personal loan application online button.

· Keep the debt-to-income ratio low

The Debt-to-Income (DTI) ratio is the percentage of your monthly debt payments divided by your gross monthly income. Using a high percentage of your monthly income on repaying debts can reduce your creditworthiness for a personal loan. So, try to maintain a ratio of 40% to 50%.

For example, if you earn Rs. 30,000 monthly, your EMIs should not be more than Rs. 12,000. If your monthly repayment obligations are already higher, choose an extended tenure to reduce your personal loan EMI burden.

· Mention all your income sources

Show the lender that you are capable of repaying a personal loan by mentioning additional income details such as rents, dividends, etc. The more income sources you provide, the better chance you have of getting a loan sanctioned.

· Choose the right lender

Always compare the loan offers of different lenders based on their interest rates, loan tenure, processing fees, late payment charges, etc. After that, select a lender that offers a competitive personal loan interest rate based on your credit score and requirements.

Getting instant approval on a personal loan depends not only on the lender but also on the borrower. Every lender may have different requirements for approving a personal loan application. But as a responsible borrower, you can follow these tips to improve your eligibility and ensure a hassle-free process. Also, in case you are successful in availing of a personal loan, you may easily get accessibility to your monthly personal loan statements to make an informed decision linked with your budgeting and finances. For instance, suppose you availed yourself of an HDFC bank personal loan; this lender will give you full access to view your HDFC personal loan statement month on month-wise to see if the lender has calculated accurately as well as to keep track of your financial budget. 

Here’s how you can plan out your finances for a personal loan better

Financial planning assists you in managing your monthly expenditures properly and helps you save a substantial amount for a rainy day. However, unforeseen events are difficult to anticipate, which may result in instant requirements for funds. In certain cases, when the fund requirements are massive, you may face fund mismatches. Here is where a personal loan can help you, as it allows you to avail of funds without any collateral and with zero restriction on end usage.

While a personal loan is available without security or collateral, this does not imply you can apply for it without conducting in-depth research. Before you hit on the ‘personal loan apply’ option, ensure you understand what your Equated Monthly Instalments (EMIs) will look like, and for this, you can use an online personal loan EMI calculator. Failure to do so might drive you into a situation where you may not be able to meet your monthly repayments on time.

With a personal loan EMI calculator, you can determine your EMI beforehand, which can allow you to plan your repayment strategy better. Read on to know more about how a personal loan EMI calculator can help you.

What is an online personal loan EMI calculator?

It is a calculator available on most personal loan lenders’ websites, which can help compute your monthly EMI, overall repayment amount, and the overall interest component. You just need to input details like the loan amount, personal loan interest rate, and repayment tenure and based on the added details, the calculator will display the personal loan EMI and overall interest constituent.

Keep in mind that such online calculators are just indicative tools designed for personal research and calculation. The banks you will approach will decide your loan components like loan amount, interest rate, and repayment tenure based on their assessment of your financial credibility.

How does an online personal loan EMI calculator function?

The calculator functions based on the following formula:

Personal loan EMI = P x r x (1+r) n/((1+r) n-1)

Here P equals loan amount, r equals interest rate, and n equals tenure in months. While you can certainly calculate your personal loan EMI manually, the chances of committing errors are more in such cases. With an online personal loan EMI calculator, you can eliminate such manual errors as the calculator computes the results accurately in a snap, which also saves time.

What are the benefits of using an online personal loan EMI calculator?

Here are the major benefits of using a personal loan EMI calculator:

Helps compare different personal loan offers – With EMI calculators, you can instantly compare different available offers on personal loans and make an informed decision. As the personal loan interest rate differs from one lender to another, you can input these numbers into the calculator to derive your monthly repayments for every offer you get. With the calculator, you can instantly figure out which offer is suitable for you.

Allows you to select the correct tenure – With the calculator, you can easily play around with distinct tenures and arrive at the correct one as per your preference and needs. Note that EMI and tenure are inversely related. This means higher tenure equals lower personal loan EMI and vice versa.

Computes overall repayment amount – With the calculator, you also can derive the overall repayment constituent with components that you need to pay off in the form of principal and interest.

Ending note

By using the calculator, you can compute your EMI, overall interest constituent, preferred tenure, etc., which allows you to make an informed decision. Thus, it is recommended to use the calculator, as by using it, you can plan your finances better and be away from debt traps, which are often due to uninformed decisions.

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