What is the Secret to Getting a Significant Personal Loan Amount?
When we think of taking a personal loan, we often think that getting a big loan amount is easy. However, it is not true. There are many various factors involved when a lender grants a loan amount.
Whether you need a personal loan for self-employed or salaried individuals, every lender first look at those parameters to decide how much you are worth. In this blog, we will look at those parameters. Once you know about them, improving them to get a larger amount would be easy.
Making the improvements will result in getting a lower interest rate too. Lenders such as ICICI Personal loan, Central Bank of India personal loan like those borrowers offer loan amount on these parameters. Now, let’s check them out.
What Parameters Decide the Loan Amount?
The available loan amount offered by lenders for personal loans ranges from Rs 1000 to Rs 10 lakhs. Some lenders go as high as up to Rs 50 lakhs. To choose a loan amount, they depend upon these factors.
- The CIBIL score
- Income and debts
- Employment history
- The loan type
We will begin with the CIBIL Score.
CIBIL Score and Credit Report
In easy words, the CIBIL score determines the borrower’s creditworthiness and how good is the debt repayment. Whether you buy and spend a credit card, make a loan payment or miss it, or borrow a loan. Everything is recorded in the credit report.
To summarize it, a CIBIL score is decided. More accurately, the credit history is rated from 300 to 900, giving it a name, CIBIL score. Everything in between tells your story. How much you are worth. Whether you a reliable borrower or a risky one.
Let’s say you need a personal loan for self-employed professional. You have a high score than what the score say about you. Here is a breakdown.
- The first thing it says, you are good at repaying debt. The score depends upon about one-third of repaid debt. In short, don’t; miss the payment; get a high score.
- You do not have maxed out on your credit card. Because your credit utilization ratio is low, which tells you to spend cautiously, in short, Don’t abuse the power you have.
- When you have different kinds of loans and debts to repay, it is called the right mix of credit. It means you have experience in repaying the debt, thus making yourself a reliable borrower. Therefore a perfect candidate for a higher loan amount.
- If you do not apply for a credit card every now and then, it says you are careful about borrowing money. You only do it when it is necessary. Again a sign of a seasoned borrower.
Mixing all these traits results in a high competence, the reliable borrower. Here is some lender’s CIBIL score requirement to get it better.
- ICICI personal loan requires a CIBIL score of 650.
- HDFC personal loan requires a CIBIL Score of 650.
- The central bank of India’s personal loan requires a score of 750.
What is Your Income and Debt to Income Ratio?
The next factor in determining the loan amount is income and debt to income ratio. They are interrelated depending upon each other. In simple words, it means how much you are earning and how many portions of the income is going into paying the debt.
The ideal ratio is about between 36% and 40%. in a simpler manner, if you would be able to pay the monthly EMI after taking the loan the loan amount is likely to be granted. Otherwise, it’s a big no.
Where You Work- employment History?
There is a huge difference between volatile and stable employment history. A volatile history means a person is jumping from job to job every few months. A lender does not like it. So, if you want to have a high loan amount right now or in the future, always get a steady job.
For a self-employed professional, it means showing a steady income month after month. And Where you work affects the loan amount you will get. If you are working in an MNC, it is always better than beginning in an unknown company with a bad track record.
Personal Loan, Secured or Unsecured
Mainly, there are two types of loans. The secured and unsecured personal loan. For a secure loan, you need a guarantor or collateral. For unsecured loans, there is no need for it. You can go for ,whatever works for you to get a high loan amount
Conclusion
In a nutshell, here’s what you should do.
- Improve the CIBIL Score.
- Increase the Income.
- Get collateral, guarantor, or a co-signer.
- Check out various lenders
I Hope these parameters will help you In understanding the work web behind choosing the loan amount.
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