personal loan application

How Does a Personal Loan Help Settle Previous Debt?

Personal-Loans

People often have multiple channels of financing, including loans and debt. Handling all of them separately and making monthly payments to different channels can be an inconvenience. Undertaking a personal loan to settle other debts can be a much-needed relief for many. The steps to taking this loan are also exceedingly simple today, as long as you meet the eligibility requirements.

You can express what tenure, monthly EMI, and the loan amount you are looking for during your personal loan application. Clients base these desires on their income, expenditure, and repayment capacity. Accordingly, the lender will let you know whether your request needs tweaking, and the two parties can come to a common ground. 

Potential borrowers can use the EMI calculator to get a reasonable estimate of the loan and interest rates. Such calculators also help them financially plan and be prepared for the various payments they need to make. This further allows them to approximate how long it will take them to settle their debt, helping them decide the appropriate tenure for a better loan experience. 

Lenders offers personal loans at competitive interest rates and a flexible repayment period. Annually, personal loan interest rates are roughly 18%. On the contrary, credit card interests are 24-36%/year. Taking a personal loan makes the repayment of debt much more cost-effective. You can comfortably pay it off between the span of 6-60 months. After crossing the 6-month mark, you can foreclose the loan without prepayment penalties.

Must Read: How to manage a Financial Crisis During Coronavirus (COVID-19)

All You Need To Know About CIBIL Score For A Personal Loan

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A mobile device that displays an excellent credit score rests on top of an credit application document.

CIBIL Score for a personal loan application is important. Before you decide to apply for a loan, make sure that you know everything about CIBIL score.

What does CIBIL Score Indicate?

CIBIL Score indicates your repayment capacity and the risk involved for the lender while giving you loans or credit card facilities. The more loans you have taken and repaid successfully, better your CIBIL Score becomes; similarly if all your repayments are arrears, it tells lenders that this borrower has already taken several loans and not paid them on time- thus poses a higher risk to lenders as well .So, your CIBIL Score dips.

Here is the meaning of your CIBIL score:

  • CIBIL Score 0 – No history (NH) or no credit track record available for the borrower. You can apply for a credit card or take a personal loan to open your file with CIBIL.

  • CIBIL Score -1 – Credit History Not Available (NA) where borrowers track record is less than 6 months. CIBIL records a minimum of 6 months of credit activity to make your credit score.

  • CIBIL Score between 700-900 – This is considered to be a good CIBIL score. It shows a history of healthy management of credit.

  • CIBIL Score below 670 – A score below 670 is considered to be a bad credit score. It is advisable that you improve your credit score before applying for a loan in such a situation.

Note: The above are only indicative and not to be taken as official CIBIL guidelines. Check with your bank regarding their CIBIL eligibility criteria and personal loan eligibility criteria for personal loans before making a decision. 

Additional Read: Things you Should Know About CIBIL Score For a Personal Loan

How to Get a Personal Loan with a Low CIBIL Score?

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A personal loan refers to the amount of money that you can borrow from financial lenders for a variety of purposes, like paying off debts, meeting wedding expenses, or going on a vacation. It is very easy to get a personal loan, provided you meet the eligibility criteria set by lenders. 

Meeting the rules and regulations of the lender is very important, as they have the key to unlock your loan. Before approving a personal loan, lenders verify many things and you need to go through all the checkpoints to get the funds sanctioned. One of the most important things is to have a high CIBIL score. Do you need personal loan with bad CIBIL score? Can you still get it approved? Read on to understand how to get a personal loan with a low CIBIL score. 

How to Get a Personal Loan with a Low CIBIL Score:

  • Income Evidence for Loan Repayment

Income evidence like bank statements or salary slips can make the process of getting a loan without a high CIBIL Score hassle-free. While submitting your personal loan application to the lender, attach all your income evidence documents, which will assure the lender of your repayment abilities in spite of poor CIBIL score.

  • Get a Guarantor

If you have a low credit score, then you can opt for a guarantor with a good credit score. If the guarantor agrees, then the lender can approve your personal loan. 

  • Low Personal Loan Amount

If you request the lender for a high amount of personal loan with a low CIBIL Score, then it’s not likely to be approved. This is because lenders doubt the repayment abilities of a borrower with a low credit score. However, if the loan amount is low, then you can convince the lender to provide you a loan. 

Once your loan is approved even if your credit score is low, ensure that you pay it back promptly so that your CIBIL score improves. This way, it would be easier to get your next loan approval. 

Must Read: Does credit score affect to your personal loan application?

Easy Steps To Check Your Credit Score

Smart Phone Showing Credit Score On A Screen

Your CIBIL or credit score represents your previous loan history. It denotes whether you have repaid your loans and credit card bills on time. Well, it is the most crucial factor your lender checks before approving the loan.

You must check your credit score before applying for a loan. It will give you an opportunity to improve  if it is not up to the mark. These days, most lending institutions provide the feature of online credit score check. You can use it to check your score within minutes.

How To Check Your Credit Score Online?

You can check your credit score in two ways. 

  • By Logging In 

Here are the steps to follow.

  • Visit your lender’s website
  • Log in to your account.
  • You will have to enter your personal details. It includes your PAN number, your passport, and Voter ID details.
  • After they verify your documents, you can access your credit score through the dashboard.
  • Without Logging In

If you do not wish to log in, there is no reason to worry. You can check your credit score by entering your PAN number. For this, you only need to enter your personal details as mentioned in the PAN card. Agree to the terms and conditions. There you go! Your credit score will get displayed.

Having a higher credit score will improve the chances of your personal loan application getting accepted. Try to maintain a score around 750. That will make you look credible in your lender’s eyes.

Fullerton India lets you check your credit score instantly. So, why are you waiting? Go and check the chances of your loan getting approved.

Must Read: Follow These Steps To check your CIBIL score online

Top Reasons Why You Should Apply for a Personal Loan

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The best part of taking a personal loan is that you can use the loan amount for any reason. While applying for a personal loan, one does not have to explicitly mention to the lender the cause of seeking the loan. Whether planned or unplanned, you may apply for a personal loan for the following reasons. 

Reasons to Apply for a Instant Personal Loan:

  • Debt consolidation: Imaging having taken multiple loans and having to pay off each of them every month. Then, there may be regular piling of credit card bills, thus, leaving you stressed under recurring financial debt. To get rid of the liability of paying off numerous bills, you may consider taking a personal loan to the tune of total financial debt incurred and then repaying all of them at one go. This will leave you with a single loan that you would be required to repay along with interest within the given loan tenure.
  • Ease of application: “For personal loans, apply here” are common advertisements that we frequently come across on the web. Credited by lenders for their customers’ use, most personal loans are unsecured loans and do not require borrowers to offer collateral as security or a guarantor to avail the loan. You may apply for a personal loan by either going to the lenders’ websites or approach the nearest branch with a loan application form. 
  • A better alternative than payday loans: Though personal loans come at high-interest rates, it is still better to avail them than opt for instant payday loans that charge one per cent interest for each day throughout the entire loan tenure. When annualized, the yearly interest rate on payday loans is a whopping 365 per cent per annum. Payday loans are easy to get but involve hefty penalty charges in case of default on payment during the loan period. However, most lending institutions do not charge extra in case of personal loan default or foreclosure. To gauge the estimated returns on a personal loan, you may use the personal loan interest rate calculator available online.
  • Paying for emergency expenses: Medical treatment is getting costlier, thus, mandating the need for personal loans. Not all people buy health insurance to cover the expenses on their medical treatment. Paying off medical bills is one of the reasons to opt for a personal loan. These medical expenses may include spending on surgeries, in addition, to pay for medications and availing aftercare facility, when required.
  • Making added investment to business: The penchant of giving shape to a business idea is common with millennials. However, any business idea, big or small, necessitates some basic investment. While business loans are available, the remaining capital requirement can be supplemented with a personal loan from your choice of lender.
  • Dream vacation: Planning a dream vacation with your loved one? Lack of funds may prove to be a hurdle. You may choose to either wait till you have saved enough or apply for a personal loan. If the need for a break is imminent, the loan amount credited to your account can help. However, it is important to estimate the amount of loan that you would require so that you do not borrow more than you require. 
  • Destination wedding: Indian weddings are synonymous with grandeur and a lot of celebration. If you have opted for a traditional wedding ceremony, get ready to participate in multiple ceremonies. Functions and observing ceremonies can be expensive. Just because a wedding is an expensive affair, it does not mean that you would postpone it for an infinite period. Statistics shared in the past reveal how a major percentage of personal loans was taken to meet marriage-related expenditure. 
  • Home remodelling: You may feel the need to refurbish your old home. Whether you are looking to replace that old roof, install solar panels or construct a new wall, remodel your kitchen or lend a whole new look to your garden area, taking a personal loan can help. Seeking loans from banks for house remodelling is a perfect solution in case you do not have the necessary cash in hand. Assess the estimated costs that would be incurred, decide the amount of loan required and use the personal loan interest rate calculator to gauge the amount of interest that would be charged.
  • Buying hi-end gadgets: You may not want to be boxed within the idea of living a moderate lifestyle. The urge to buy a new motorcycle or spend on a costly entertainment centre or gaming computers can be easily satiated with the amount received from a personal loan. Personal loans lend you the advantage to make an immediate purchase instead of having to save for months to make the purchase. Though you may have to repay the loan amount along with interest, it saves you from the pain of having to wait before buying your favourite item.

Additional Read:  Things to Check Before Availing a Personal Loan Online

Factors to Consider while Taking a Personal Loan Online

Applying for a personal loan has become quite simple by using the online option. All you have to do is visit the bank or NBFC’s website, fill up the online application form for an instant personal loan and upload the scanned copies of the required documents. Once you submit the personal loan application online, you will get approval for the loan in no time barring your credit score is good and all the documents are in order.

You must have to know how to Calculate Personal Loan EMI. You can also check the interest rate and EMIs on your personal loan by using the personal loan EMI calculator available on the bank or NBFC’s website. 

Before applying for a personal loan online, you need to meet the personal loan eligibility criteria by fulfilling some basic conditions laid down by the bank or NBFC. You need to disclose your monthly income and submit your PAN number, credit score and KYC documents. If you don’t know your credit score, your bank or NBFC will check it for you. To get your loan approved swiftly, do not conceal any information and do not submit any false documents as it can hamper your chances of getting a personal loan. Make sure to check processing fees, foreclosure charges, and part pre-payment charges before applying for a personal loan online.    

Must Read:  How We Can Get Instant Personal Loan Online?

Additional Read: 7 Simple Tips to avail a Personal Loan in India