Money flows faster than water and evaporates at a much faster rate than it too. Just like a kid with ADHD, money never stops at one place as is always in circulation. Either coming in your pocket or going out but never staying.
When the situation is such and you don’t have enough funds to go after and chase the things you really want. And maybe you do have ways to get the funds but it’s gonna take a lot longer, banks/lenders are whom you turn to.
But how do you know whether the bank/lender is going to lend as much money as you want or better yet lend you any money at all in the first place? Here are 10 factors that help determine your eligibility in securing a loan.
No bank or financial establishment would agree to lend you a certain sum of money until they are sure of your capability to return the principal amount with interest.
This is why banks make sure to check where you work and your position and verify whether you have a stable income to payback the lender.
Whether you are an entrepreneur and have a self-owned business or you’re working under a firm, the basic background check is just to make sure your ability to pay back the given amount.
2. Credit score
Your credit score is quite elementary and a prime factor when it comes to determining your eligibility to receive a loan. Your credit score is basically a score that showcases how you’ve used your credits before and if you are regular in clearing your debts on time.
A report called a credit report gives your credit score. Your credit score is mainly obtained from viewing your total debt, the number of accounts you possess, your credit history, and how you’ve repaid your past loans on your present credit/debit card.
3.Payment/ Repayment history
Just like how a person’s web history talks about what a person does behind walls or discreetly/ anonymous an individual’s bank history talks about his eligibity to receive a loan from lenders. The thing is if an individual has made late payments or has had occasions where he/she has gone default then lenders would take a close look at this and make a proper lending decision judging your repayment history. Default is never a good thing to be showcased on a repayment history report as it can severely hamper your chances of securing a loan.
4. Occupation experience/ Employment experience
Work is worship and when it comes to loans the lenders check to verify how much of the proverb you really consider and apply. Meaning whether you have been employed for a substantial amount of time or not.
The usual requirement would be to have a minimum work experience of 1 – 2 years. This is just to start with as if it’s seen that you have been employed by the same employer for a prolonged period of time then your chances of securing the loan goes higher as the bank/lender considers you as a credible person for this. And if you are in a recognized corporation then the chance increases further more in sealing the deal.
5. Age consideration
Usually, the age consideration for applying for loans is between 23-55. Nowadays even if you don’t have a credit history some banks allow you to take loans from them.
6. Salary bracket
Your salary bracket/ income helps the banks determine and consider lending you money. Usually, a salary of 18,000 is the minimum for acquiring loans from any kind of bank. But this is not only to consider your eligibility in receiving the loan but also about how much money the bank is willing to give you. 18,000 is the usual minimum but some privatized banks lend money only if the receiver had a base salary of 25,000 or more.
7. Employer categorization
Companies undergo a certain kind of test that determines what group they belong to A, B, C, and D based on assessing the company’s risk factors. If a company has been placed under category C or D then the employees of those companies may find it difficult to acquire loans from banks. Nowadays banks have come up with new and open minded ways of operating and now allow individuals to receive loans regardless of what category their company or employer falls under.
8. Property details
Usually, loans are given by weighing in your assets; mainly property details. So that in case you become the default in paying back the bank, the bank would seize the said properties to compensate for the loan given. But this is its downside, the upside is property details also provide more assurance to the bank that you have a substantial amount of wealth and a loan of a higher amount could be sanctioned to you.
9. Current liabilities
The lender usually makes sure to check what debts you are already involved in clearing and checks whether a loan could be given based on that. As the individual needs to have the capacity to also clear his already pre-existing debts and start paying the interest for the current loan along with it. Therefore a stable income is a must in such a case. So the lenders check enough times and verify whether the person in question is capable of doing so.
You can always go for the shorter route i.e. shorter repayment period and increase your chances of securing a loan. At a lower interest rate. But also make sure not to be over smart and go beyond your means and always make sure to maintain your budget properly so as to make monthly EMI payments hassle-free.
There are applications such as ‘personal loan EMI calculator’ which help sort this out for you. Now equipped with the right amount of knowledge about what eligibility is and what factors influence the rate at which, and your chances of getting/securing a loan.
You should be able to go to any bank of your choice and have to do the least to convince the bank to sanction you a loan. Provided you have also practiced what has been preached above, contextually. You can learn more about eligibility for applying for a personal loan by researching online at https://snowbikefestival.com/.