Skip to main content

WHAT FACTORS DO LENDERS CONSIDER IN LOAN APPLICATIONS?


Nowadays, lending institutions have to be careful of whom to lend depending upon borrower’s credit worthiness as they would face the risk of default which can be avoided if the spadework is done earlier. A lot of verification has to be performed before a loan application is processed and the money is considered safe to be disbursed.

Risk evaluation is important for all kinds of loans, especially in case of unsecured loans. However, the unsecured loans such as Personal Loans are popular these days but have increased risk for the lender. In order to decrease the risk, when you "Apply For Loan" then lenders do a thorough check of some of the borrower’s aspect.

In this article, we will cover such factors that lenders do consider before processing your loan application.

  • Current income: One can apply for any kind of loan only if their monthly income is higher than INR 30,000. It is crucial to put minimum earnings in place otherwise it will be difficult for lending institution to manage the risk of default. Therefore, lenders always ask for your salary slips of last three months when you avail a loan.
  • Credit Score: However, loans are processed quickly these days but the first thing that lenders consider is your CIBIL score. It indicates your credit history covering all the debts you are holding and repaying currently. It provides fair indication of your credit worthiness to the lender and a score above 750 is generally considered to be good enough.
  • Employment history: Every lender prefers to obtain the details of borrower’s employment history which includes the time you started working in current organization, details of previous jobs as well as job breaks. It will help the lender to have fair assessment of your earnings till date. One needs to be employed for 1-2 years in a specific organization.
  • Loan amount: A loan approval is also based upon the amount of loan requested from the lender. If you ask for small quantum or your relationship is already good with the lending institution, lender may be willing to overlook a few details to approve your loan application but if you have larger requirement, then lender will do a detailed evaluation of your finances which can’t be avoided at all.
  • Loan purpose: The other factor that decides your loan approval is the purpose for which loan money is going to be used. The chances of loan approval are high when you have low risk needs such as home renovation or rental deposit whereas the chances of getting a loan reduce when you need it for high risk purpose like a business start-up.

Hence, whenever you "Apply For Loan Online" or offline, the loan officer at lending institution will evaluate your loan application and if everything is found to be at right place then you will get your loan disbursed in 3-4 business days. Being a borrower, it is good for you to ensure that you maintain a good credit history and have better credentials to get an easy loan approval.


Labels

Labels:

Comments

Post a Comment

Popular posts from this blog

A COMPREHENSIVE GUIDE TO APPLYING FOR A USED CAR LOAN ONLINE

In today's fast-paced world, possessing a car isn't simply an extravagance but a need. For many, a used car is a magnificent choice to satisfy their transportation needs without breaking the bank. Notwithstanding, financing a used car purchase could appear to be daunting. Fortunately, to apply for a used car loan online has become a convenient and accessible choice. Here is a comprehensive guide to navigating the process without a hitch. Understanding Used Car Loans Before jumping into the application process, it's crucial to grasp the fundamentals of used car loans. These loans are specifically designed for purchasing pre-owned vehicles. Lenders offer varying terms and interest rates based on factors like credit history, upfront installment, and the vehicle's age and condition. Preparing for the Application 1. Know Your Budget: Decide your budget by assessing your financial situation. Consider factors like a month-to-month income, existing expenses, and potential init...
Post a Comment
Read more

A COMPREHENSIVE GUIDE TO AVAILING A LOAN ONLINE

In today's fast-paced world, the ability to get financial assistance rapidly and helpfully has turned into a need for many. While, you " AVAIL A LOAN ONLINE " offers a seamless answer for meeting various financial requirements, whether it's for education, starting a business, or dealing with startling expenses. Here is a comprehensive guide to navigating the process successfully. Understanding Loan Options Prior to plunging into the online loan application process, it's crucial to understand the sorts of loans available. Whether it's personal loans, business loans, or mortgages, each fills various needs and accompanies varying interest rates and repayment terms. Assess your requirements and financial situation to decide the most suitable loan type. Research and Comparison Whenever you've recognized the kind of loan you require, research various lenders. Various financial foundations, banks, and online lenders offer loans. Compare interest rates, repaymen...
Post a Comment
Read more

GUIDE TO BUYING A USED CAR: FIGURING OUT INTEREST RATES

As of now, in the fast-paced universe of today, possessing a car is neither a luxury nor a need. While considering the practicality of purchasing a used car, the vast majority of individuals arrive at this resolution. In any case, financing such a purchase can be troublesome. This blog aims to impart information regarding the intricacies of used car loans, with a particular emphasis on the critical component of interest rates. What is a Used Car Loan? A " Used Car Loan " is a financial product designed to assist individuals with the expense of purchasing cars. A used car loan, in contrast to a conventional car loan for another vehicle, is designed to accommodate the extraordinary circumstances associated with purchasing a used automobile. Factors Influencing Used Car Loan Interest Rates 1. Credit Score: An essential part of loan applications, the credit score significantly impacts the interest rate determination process. Individuals must maintain a decent credit history bec...
Post a Comment
Read more