A personal loan is a small loan that is taken out from a bank, credit union, or non-banking financial corporation (NBFC) to cover personal expenses and unexpected expenses. These are unsecured or unprotected loans. Because they are “unsecured,” the lender is unable to auction or sell whatever the borrower possesses.
Because there is a bigger risk involved, interest rates on such loans are higher than those on a home loan, vehicle loan, or gold loan. Income level, credit history, employment status, and repayment capacity are some of the criteria used to sanction such loans and get the best personal loan interest rate.
Features of A Personal Loan
- Personal loans with a flexible term of up to 5 years (i.e. a minimum of 6 months with an additional 6 month block). You have the option of choosing any flexible tenure of your choice.
- Simple monthly payments via Equated Monthly Installments (EMI), Electronic Clearing System (ECS), or a Standing Instruction (SI) on your HSBC bank account.
- You can also be facilitated by personal loan balance transfer.
- You do not need any collateral to give to the bank.
- Simple documentation, processing, and disbursement
Role of CIBIL Score in Obtaining A Personal Loan
Personal loans are unsecured loans provided by financial organizations in which you are not obliged to provide any collateral or security. Most banks and NBFCs only issue personal loans to applicants with strong credit/CIBIL scores to reduce the risk of defaults or non-payments by borrowers. This raises your chance of fast approval. TransUnion CIBIL, Experian, Equifax, and CRIF Highmark are the four credit bureaus that are famous in India for giving credit scores. The credit score is calculated using financial records supplied to credit bureaus by the bank or other financial institution.
How to avoid facing personal loan application rejection?
- A 750 CIBIL score is in demand.
- Before applying for a loan, check your credit report and look for any errors. If found any, correct them to avoid rejection.
- Before signing any loan agreement, compare the personal loan offers from banks and NBFCs.
- Apply from an existing known lender so that there are increased chances of being loan application approved.
- A credit utilization that is decent is advisable (Below 30 percent )
- You must not apply for various loans at one single time.
What CIBIL score does one require to obtain a personal loan?
Credit bureaus assign you a digit between 300 and 900 as your credit score (such as CIBIL). Higher CIBIL score indicates fast approval of your loan application. If you have a good credit score, you may be eligible for a larger loan or cheaper interest rates. A score below 750, on the other hand, may diminish your chances of acquiring a personal loan, or award you a smaller loan or a higher interest rate. If your credit score is below 600, you should strive to figure out why it is so low.
The Bottom Line
So, a good CIBIL is crucial to get a hassle free loan. You can get an instant personal loan even with the help of your lender. If you have an excellent relationship with your current bank or lender and have paid off all of your loans on time. The likelihood of loan approval rises, as does the benefit of low interest rates. Existing bank customers will be chosen for pre-approved offerings, exclusive deals, discounted rates, and more. This is the way it goes and you can get your best deal.