Personal loans don't solely depend on a good CIBIL score. Banks also scrutinize factors like your fixed monthly income, age, and previously taken loans. If there are any deficiencies in these, your loan application might be rejected. Therefore, it's crucial to pay attention to these aspects before applying for a loan.
Personal Loan Tips: A good CIBIL score alone is not sufficient before taking a personal loan. Banks also consider your fixed monthly income, age, and the status of previous loans. For instance, young salaried individuals with stable incomes can easily obtain loans, whereas older applicants or business owners may need to provide more documentation. If a significant portion of your monthly income goes towards repaying existing debt, banks tend to be hesitant in granting a new loan. Keeping all these factors in mind is essential for loan approval.
Importance of Fixed Monthly Income
Your monthly income is the most crucial factor in the personal loan approval process. The bank ensures that you can make your loan installments on time every month. For salaried individuals with a fixed salary, obtaining a loan is generally easier.
Conversely, those with flexible or uncertain incomes might face difficulties in getting a loan. Business owners and self-employed individuals are required to provide proof of their monthly income for a loan. If you are employed by a large company and your salary is regular, it becomes easier for the bank to determine that you will repay the loan on schedule.
Impact of Your Age
Your age also plays a significant role in personal loan approval. Generally, younger applicants receive loans more quickly. Banks believe that younger individuals have a greater capacity to increase their income and repay loans.
Conversely, older applicants and seniors have a lower probability of getting personal loans. The reason behind this is that banks perceive that these individuals' income might be limited in the future, making loan repayment potentially difficult.
Previous Debt and EMIs
If you have previously taken a loan from a bank or financial institution, and a significant portion of your monthly income goes towards repaying EMIs, obtaining a new loan might be challenging. The bank assesses whether your current financial situation is favorable for a new loan.
The higher your existing EMIs, the more cautious the bank becomes. If a large part of your income is tied up in ongoing debts, the bank may reject your application for a new loan.
Job Stability
Job stability is also a crucial factor in personal loan approval. If you have been working for a firm for a long time and your job is stable, the bank is confident that you will repay the installments on time.
Conversely, applicants with new jobs or unstable employment, such as freelancing, may find it difficult to obtain personal loans. The bank understands that fluctuations in income can affect loan repayment.
Deficiencies in Documents
Sometimes, loan rejection is also caused by errors or incomplete information in the documents. The bank verifies the applicant's identity, income, bank statements, and other essential documents. If any document is not submitted correctly, the application may be rejected.
Importance of Credit History
While a CIBIL score is certainly important, banks do not look solely at the score. Your entire credit history, records of previous loan payments, and any default information are also crucial. The bank determines how reliable your loan repayment behavior is.
