Need money to pay for emergency medical expenses? Or to buy a two-wheeler? Or maybe to finally own a home? There is a bank loan for all these situations – and more. Before you apply for a loan, you need to be clear about what type of bank loan you need so you can apply for the right one.
How can I qualify for a bank loan?
Credit score: Your loan- eligibility depends on the kind of loan you want. In general, banks look at your credit history (previous loans and credit cards) to see if you have paid off your loans on time. It is advisable to have a credit score of 750 or more to get the best possible terms and conditions on your loan.
If you have not taken any loans or credit cards before, then it is a good idea to build your credit profile before applying for a loan. Many banks might reject your loan application simply because you do not have a credit history.
Employment status and salary: Banks want to know if you will have a steady income for the duration of the loan so that you will be able to make your loan repayments in full and on time. They also want to make sure that you have a stable job and do not change jobs frequently.
What kind of loan can I apply for?
Your eligibility also depends on the kind of loan you want to apply for:
Personal loans: You can use a personal loan for any personal expense, including your children’s education, buying furniture for the home, hospital expenses, celebrating a wedding, or even to pay for a vacation. There are no restrictions on how you can use the money. However, since there is no security or collateral involved bankers will look primarily at your credit history and income before approving the loan since they want to make sure you have a history of making loan repayments on time.
Auto loans: You can get a loan to buy a two-wheeler or a car. There are a variety of auto loan offers in the market. Once again, you need to have a good credit score and minimum income in order to qualify. Your vehicle will be held by the bank as collateral until you repay the loan in full with the interest.
Home loans: Having a good credit score and credit history will help you get a home loan at the best possible terms.
Gold loans: If you have gold jewelry, you can use it as security and get a loan. Since you are pledging your gold as collateral, there is not much documentation involved and the approval and disbursal process is much quicker.
How do I choose the best loan offer?
There is a ton of material online and you can refer to the various bank websites for details. Alternatively you could leave your contact details and ask a bank representative to contact you. If you do not have the time or inclination to wade through the loan offers, CreditMantri can help you improve your credit profile, if required, match you with the offers that best suit you, and guide you through the entire application process.