You can apply for a personal loan for a number of the reasons. For people who have a good credit score, applying for a personal loan doesnâ€™t look like a tedious task. They think that they can get the loan application approved; however, it is not true.
If you are looking for a
fresh purchase via the loans, having a good credit score is not enough to get
it approved by the bank officials. A good credit score is when you indulge in the
timely payment of your dues be it the education loan expenses or the credit
card dues. This is how you build a strong credit history.
Your loan can be rejected even if you have a good credit score. One of the most important considerations is played by the debt to income ratio that might make you unworthy of getting the loan approved.
To explain the concept in
a better manner, let us put forth an example, suppose a person has a monthly
income of INR 100,000 and is having a servicing loan EMIs of INR 30,000. Letâ€™s
consider the living expenses to be 50% of the income. After making all the
necessary deductions, you will be left with only INR 20,000. This left money
makes him eligible for another loan say a 20-lakh loan for a home or a 6-lakh
personal loan as he can service the additional EMI with the INR 20000 surplus money,
he has with him.
However, the condition
that arises over here is that if the monthly expenses increase by INR 30000,
then he will not be allowed to secure another loan for himself which goes for
all the lenders. So, a good credit score is not going to help you to secure a
loan if you do not have a good debt to income ratio.
There is one more thing
that you need to consider over here. You need to avoid approaching multiple
lenders at the same time since that will be counterproductive for your loan
approval. Called as â€˜loan stackingâ€™ by the lenders and banks. It occurs when a
person fills in multiple applications with different lenders at the same time
so that they can get it approved from at least one place.
Instead of going to multiple lenders, look for the market presence and choose a single bank to apply personal loans in India at an attractive rate of interest.
There are some points that you need to consider to work through finances. Always avoid applying to multiple lenders. Make sure that you have a good credit score and ensure that your debt obligations never exceed more than 50% of your income.