India’s credit landscape is witnessing a strong inclination of individuals towards availing small ticket personal loans. As per an RBI report, the credit outstanding for a personal loan has escalated from Rs. 26 lakh crore in FY2020 to Rs. 29.18 lakh crore in FY21.
With an NBFC personal loan, it has become easier for borrowers to have easy access to high quantum funds. Moreover, NBFCs have a strong risk management structure with lenient loan terms and a full-fledged online presence, which has stirred the demand for this credit option. However, for the borrowing to be functional, one should have an in-depth idea regarding certain factors. Not knowing these intricacies will make borrowing counterproductive.
Know 5 Important Factors Before Applying for an NBFC personal loan
Before applying for an NBFC personal loan, individuals should consider the following factors to make the borrowing hassle-free-
- Meet lender’s eligibility criteria: The first and foremost factor that borrowers have to consider is to meet the eligibility criteria set by the lender. Here are the eligibility parameters that borrowers have to meet while applying for an NBFC personal loan:
- Applicants must be from India
- Borrowers must work in reputed MNCs, private or government firms and have a stable source of income
- Individuals should fall in the age bracket of 21 years to 67 years
- Proper documentation: Besides meeting the NBFC personal loan eligibility criteria, borrowers should also have a well-rounded idea of the following documents they need to submit while availing of a personal loan:
- KYC documents
- Income proof (salary slips, bank account statements, ITR etc.)
- Proof of address (passport, electricity bill etc.)
Borrowers must note that the list of documents is indicative. Lenders may ask for additional documents during loan applications.
- Check repayment term: Borrowers must be mindful while choosing a suitable loan tenor. Not choosing the right repayment tenor will affect borrower’s financial health in the long run. Opting for a longer repayment tenor will reduce the EMI liability; however, the interest outgo will increase. On the other hand, choosing a shorter loan tenor will reduce the interest outgo.
In this regard, borrowers can calculate personal loan EMIs beforehand and settle for a loan tenor to help them tide over the repayment tenor easily.
Borrowers can easily compute personal loan EMIs using a personal loan EMI calculator. Moreover, borrowers can also view loan amortization and accordingly plan their repayment schedules.
- Maintain a decent credit history: As a personal loan is an unsecured credit option, lenders scrutinise the borrower’s credit score before approving the loan application. A credit score reflects a borrower’s creditworthiness and repayment history. Applying for a personal loan with a CIBIL score of 750 and above will help borrowers receive faster loan approval and a nominal interest rate. On the other hand, borrowers with a subpar CIBIL score must know things that can improve personal credit score and help them receive faster loan approval.
- Additional fees and charges: Before applying for an NBFC personal loan, enquire about loan terms and miscellaneous charges like processing fees, administration fees, etc. All these hidden charges significantly contribute to the loan expenditure. Hence, borrowers should compare different lenders and get clarity regarding the additional charges before availing of the credit option. Borrowers must know everything about the charges applicable to a personal loan.
In addition to this, borrowers must also check the exclusive pre-approved offers extended by several leading financial institutions on financial products like personal loans, business loans, credit cards, etc. These offers streamline the lending process, making the borrowing hassle-free. Intending borrowers can check the pre-approved offers by submitting their names and contact details.
Now, as borrowers are well acquainted with the factors to consider while availing of a personal loan, they can proceed with the loan application procedure.
Know how to apply for an NBFC personal loan
Borrowers can follow the mentioned steps to apply for a personal loan:
Step 1: Go to the official website of your preferred NBFC and head to the product page
Step 2: Click on ‘Apply Online’ to get redirected to the online application form
Step 3: Select desired loan amount and finally submit the application
Besides scrolling to the official website of the preferred lender, borrowers can conveniently apply for a personal loan from the instant loan app extended by several financial institutions. These apps are highly user-friendly, helping borrowers track the status of their loan applications from the comfort of their homes.
To sum up, NBFC personal loan is the most sought-after financing option that helps borrowers get substantial loan amounts instantly without requiring them to indulge in tedious documentation procedures. However, before making an application for NBFC personal loan, borrowers must consider the factors mentioned above to make an apprised decision and make the borrowing worthwhile.
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