What is the new normal? People wearing face masks, maintaining social distancing, and paying attention to hygiene health. All this is happening due to coronavirus, the virus infected the first person in December 2019 and since then it has affected millions of people across the globe. The virus has impacted life so much so that people are losing their jobs, salary is getting deducted and even the economy has been pushed into a tailspin. According to the Ministry of Statistics in September 2020, India saw a contraction of 24 percent in the economy as compared to the same period the year before.
Looking at this situation, lenders are keenly lending a helping hand. To solve the financial crunch in a short time personal loans are the best option. Personal loans are unsecured loans, in which a borrower does not need to pledge any collateral. Generally, a personal loan is offered at a higher rate of interest, which ranges between 10%-24%.
This type of loan can be used for any purpose like wedding, vacation or medical emergency. Lenders check the eligibility of a borrower before sanctioning a loan- like credit score, age, income and more. So, as to avoid rejection of loan, here are few ways through which you can increase your personal loan eligibility even in the time of covid:-
A Good Credit score is a key lower interest rate
A credit score is a numerical expression which ranges between 300-900, the score represents the creditworthiness of a person. A credit score is considered excellent if it ranges between 750 and 900. If a score lies within this range then the lenders easily sanction the loan, as it ensures that a borrower will be able to repay the amount on time. With a good credit score, lenders can also offer you a lower interest rate. Credit score can be improved by paying off debts on time, closing unused credit cards and paying bills on time.
Don’t go for higher EMI
Assess how much EMI can you pay. Don’t choose higher EMI to pay off debt as early as possible. The total EMI should not be more than 45% of your salary, if you choose to pay EMI more than 45% of your salary then you might face challenges at a later stage to meet the daily expenses. EMI and loan tenor have an indirect relationship, shorter the tenor, higher the EMI and longer the tenor, lower the EMI. To avoid a rejection of the loan strike a right balance between lower EMI and shorter tenor, whatever suits you.
Multiple banks inquiries should be avoided
Multiple inquiries from banks can pull down your credit score, while single enquiry does not have a major impact. When you apply for a loan, the bank also assesses how many times a borrower has made inquiries. Multiple inquiries often lead to rejection as it represents significant credit risk. So, to increase the eligibility you must not make multiple inquiries should be avoided.
Add a co-borrower
Adding a co-borrower can definitely enhance borrower eligibility. A co-borrower can be your parents or spouse. When a co-borrower is added, eligibility of both the borrowers is assessed. It is better to add a co-borrower who has a good credit score and fulfils the eligibility criteria. it increases the chances to get a loan. Additionally, adding a co-borrower with a huge pay may make you qualified for a greater credit sum at a lower interest rate on a Personal Loan.
There are also a few banks who have introduced covid personal loans which ensures that people are able to meet the living hood expenses and medical expenses. The eligibility criteria differ from lender to lender and lenders have significantly reduced the interest rate, covid personal loans are available at 7.2 percent to 10.5 percent per annum.
- Bank of Maharashtra
- Punjab National Bank (PNB)
- Indian Overseas Bank (IOB)
- Bank of Baroda (BoB)
- Indian Bank
- Union Bank of India
- UCO Bank
- State Bank of India (SBI)
- Bank of India
Conclusion: The year 2020 has been difficult for many people because of coronavirus pandemic. The virus has impacted the lives of many people due to various reasons to fight with those circumstances they have to take a personal loan. So, if you are also looking to take a personal loan, work on the above-mentioned points as it will increase your personal eligibility.