5 Personal Loan Tips for Salaried Employees

31 August, 2018

Personal loans can be taken for a number of reasons. You may have an immediate financial need or may need the funds for an executive education program or it might be for home renovation or medical expenses, you can use the personal loans funds for any discrete financial needs you may have.

If you are a salaried employee there is a high-chance that you are frequently contacted by banks and NBFCs, offering pre-approved personal loans. But once you apply for it, you realise that there is actually a lengthy approval process to follow and there was no pre-approved amount to begin with.

Today, we are sharing five personal loan tips for salaried employees in India to help you get a personal loan faster and in a hassle-free manner.

Choose your loan carefully

Sometimes you may end up taking a loan of higher amount than your requirement because the bank’s sales rep said so. This means your EMIs will be higher and so will the borrowing cost i.e. the processing fees, upfront fees etc. charged by the lender. So, before shopping for personal loans online, do a careful assessment of your requirements and the interest rates you can comfortably repay. Online peer to peer lending platforms like Monexo can give you better deals in this regard as you are free to choose your loan amount and loan tenor as well.

Check the minimum eligibility requirements

It is always bad to have a personal loan application rejected due to a number of reasons. One, it causes mental distress if you need funds immediately, two, every rejected personal loan application dips your credit score by few points, and three, you have to start the process all over again. You can avoid all this by doing a simple preliminary check of the eligibility requirements set by the bank or NBFC. If your profile doesn’t fit in, there is no use applying for the loan, no matter what the sales representative of the bank tells you on the phone. Once again, online P2P lending platforms like Monexo have a more relaxed eligibility policy than banks and NBFCs. You can get a personal loan with a monthly salary of ₹15,000 and three months of continuous employment.

Adjusting your EMI amount

The monthly repayment of the loan is going to reduce your net monthly income, so you should adjust the EMI amount to something that you can repay comfortably. You can do that either by extending the tenure of the loan or by reducing the principal amount you are borrowing. In this regard, the EMI terms offered by a P2P lending platform are the best, period. For example, peer to peer financing offers flexible EMIs and loan tenures up to 36 months for small ticket personal loans.

Check for hidden costs

As mentioned at the beginning, there are a slew of other charges levied by banks and NBFCs for providing a loan. These charges can make up 5-7% of your loan amount, plus the upfront fees, part payment/pre-closure fees. So, before you apply, confirm the exact charges and costs with the lender as these charges will be deducted from the actual loan amount and may leave you short of the desired funding. For example, if you require a loan of ₹100,000 and the lender charges you 7% for processing, you will only get ₹93,000 in your bank account. On the other hand, P2P lending platforms like Monexo offer significantly less processing charges i.e. only 2.5 to 4% based on your credit history and have no provision for charging upfront fees or registration fees.

Maintain a healthy credit score

Last but not the least, every lender checks out your credit history and CIBIL score before processing your application further. If you do not have the minimum score required, the application is rejected. As mentioned earlier, every ‘hard query’ reduces your credit score even further. So, before you apply for a personal loan, try to improve your credit score by repaying existing debts and maintaining a healthy balance in your bank account. If your credit score is way too low or there is no immediate way you could improve it, try P2P loans for a change where they assign you their own credit rating for loan approvals.

Interested in applying for a personal loan online?

If you have been unable to get a personal loan from a bank or NBFC or are simply looking for a personal loan with low interest rates and flexible EMIs, you can visit us at https://www.monexo.co/in/borrowers and apply for a quick personal loan now.