Things Salaried People should keep in Mind before Taking a Personal Loan

Personal loans are very helpful in the financial crisis. The concept of personal loan attracts people more than any other loan as you can take it for any personal reason without worrying about collateral security.

Especially, the salaried employees who normally can’t fulfill their wishes and needs in a fixed salary choose personal loans. Banks and other lending agencies often contact these salaried employees in order to offer pre-approved personal loans. However, after applying for it, they come to know that there is a lengthy pre-loan process.

The personal loan can assist you but, sometimes it can also turn into a big burden if you don’t keep certain things in mind while borrowing it. Today, we are going to share some useful tips that can help the salaried employees for a hassle free and fast personal loan approval.

#1 Choose your Loan Amount Carefully:

You have to be cautious while deciding the loan amount. Go only for an amount which you actually require. Don’t get persuaded by the bank salespersons in this matter as it’s their job to motivate the individuals to go for higher amounts.

Furthermore, there is a limit set by every bank for salaried individuals on the basis of their employment history, salary, and organization. It’s not necessary to choose the highest amount only because it’s available to you.

The higher the loan amount, the higher will be the EMIs, processing fee upfront fees etc. So, be wise while deciding your loan amount so that it won’t become burdensome at the time of repayment.

#2 Check the Minimum Salary Required for Loan in Eligibility Terms:

You should be vigilant enough to check the eligibility criteria of the bank in which you are applying for a personal loan. For salaried individuals, the monthly salary and employment period in a company affect eligibility. If you will apply for the loan without checking these things beforehand then, there are chances of loan rejection.

Rejection can affect you in many ways. Initially, in need of immediate funds, it becomes a big tension. Secondly, rejected personal loan application affects your credit score negatively. Finally, starting the process all over again will be time-consuming. To avoid all this, you have to run a preliminary check about the bank’s terms.

Don’t apply for a personal loan if you are not a right fit as per the terms. There are plenty of other banks in which you can try your luck. For instance, the employees having a salary between INR 4,000 to 20,000 can avail Citibank Personal Loan.

#3 Check for the Hidden Costs:

You should be aware of the extra charges that banks directly cut from your loan amount. These are the upfront fees, processing fees, pre-closure fees and some other charges varying from bank to bank.

These charges are a total of 5% – 7% of your loan amount. So, you can fall short of desired funds in case you don’t know about them. For example, if you have applied for a loan of INR 100,000 and the bank cut 7% extra charges then, you will only get INR 93,000 as the loan. It can highly effect in some cases where the exact amount is required.

Thus, ask the bank representatives clearly about these hidden costs so that you can keep a margin in the loan amount. People usually skip such points in haste and due to unawareness which leads to undesirable consequences.

#4 Adjust your EMI Amount Wisely:

Remember that, the monthly payment of the personal loan is going to be reduced from your monthly income. This is one of the most important things that trouble the salaried individuals after taking the personal loan.

You should check your EMI amount and adjust it as per your requirements if it’s high. Now, you must be wondering about how you can change the EMI amount. You can either do it by increasing your loan repayment tenure or by reducing your loan amount.

In recent times, banks are offering many facilities while taking a personal loan, one of which is flexible repayment tenure. You can decide your tenure as per your comfort. Some loans like Citibank Personal Loan offers you to stretch your repayment tenure even up to 60 months.

#5 Maintain a Healthy Credit Score:

Credit score plays a prominent role in the approval of any loan. The banks won’t provide the loan to candidates who have a low credit score as it can be risky. Every bank checks the CIBIL score and credit history before approving any loan application.

Does the question arise that how can you enhance your credit score? For doing this, you have to repay your existing debts (if any) and maintain a considerable balance into your bank account.

You have to be patient while trying to increase your credit score. It may take some time. If you already have a good rapport with the bank then, you don’t have to worry about it.  There are plenty of credit score calculators available online nowadays. You can take the assistance of these apps to check your credit score in advance.

#6 Check the Required Documents:

You should check the list of required documents for availing a particular personal loan before applying for it. For salaried employees, it’s mandatory to show evidence of their salary and employment in a certain company in some banks.

The problem arises when you are working with an organization that hasn’t provided you with an authentic offer letter or salary slip. It usually happens with small scale companies and start-ups. You should demand these necessary documents from your company if you are planning to take a personal loan.

Tell your company about the loan, and you will surely get these documents. But, this type of matters is somewhat time-consuming. So, check the documents beforehand and complete them on time.

Hence, you can get a personal loan and repay it smoothly by taking care of these things.

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