All of us remember the euphoria of our first job. To be in a new place, learn new things and especially getting that first pay cheque.
As you see your bank balance swell with each month’s salary being credited into your bank account, you begin to eye the 32-inch TV in order to watch your favourite football team. You also want to buy a washing machine for your home. But, wait a minute, you have not saved enough and you are falling short by quite a margin. So, what do you do?
You explore the option of availing a loan. But you have heard that lenders extend personal loans to employees with a minimum period of 2 years of service and regular monthly salary. Is there some way you can avail a personal loan with only 6 months service in your first job? Would a lender consider your 6-month employment and extend the loan to you.
Actually, you can avail a personal loan from lenders such as Tata Capital if you can satisfy the conditions under which the lender extends personal loans because your other credentials could add to build up your creditworthiness mitigating the risk for the lender.
Let’s see how your other credentials can help you to get the personal loan you desire.
Lenders’ eligibility conditions
Lenders prescribe eligibility conditions for the salaried borrower which may include
1. Minimum 2 years of employment out of which minimum 6 months in the current job
2. Creditworthiness and credit score
3. Between 21 and 58 years of age
4. Minimum Rs 20,000 monthly salary
5. Compliant with KYC norms
Besides these, the lender looks primarily for stability in your job and income, your capacity to repay the personal loan along with the interest, your past relationship with the lender and any other loan you have with other lenders.
In the normal course, you can wait until you complete 2 years in employment and then apply for the personal loan. But you are eager to acquire some of the gadgets you need for your home immediately and so you start exploring ways and means of securing a personal loan.
Overcoming eligibility conditions
You find that there are ways to overcome the eligibility conditions and convince the lender of your credibility and earnestness to repay the personal loan without defaulting on the repayment. You can add strength to your application for a personal loan if you can.
1. Produce a credit card where you have a reasonable credit limit – this also helps in obtaining a credit score
2. Offer security of a life insurance policy or some other idle asset
3. Apply for a personal loan with a co-applicant who has a good credit score and satisfies the other conditions of the lender
4. Co-opt a family member or a friend to serve as guarantor
5. Offer to pay a higher interest
6. Build up your case by invoking the help of your parents or other family members who have a good relationship with the lender
The above will help build up your case with the lender with every possibility of the loan being granted to you.
Most lenders tie-up with organizations to extend personal loans to their employees and typically lenders set eligibility conditions that are different from the ones for the general public. You can check with your employer and lenders and then:
1. Apply to a lender who has a tie-up with your employer for extending loans to its employees
2. Apply to a lender where your employer is on the preferred list of clients
This facility is very useful for employees who have joined recently.
You can also do some research and look at lenders that have more liberal eligibility conditions, and make out a case for your personal loan. It is possible that you might have to pay a little more in terms of interest and a shorter tenure. You can use the EMI calculator for personal loan available on the websites of lenders to check up the EMI you have to pay with the higher interest to satisfy yourself that you can afford the EMI.
From the above, it is clear that lenders want to convince themselves that you as a borrower are not a credit risk. Therefore, you have to pull out all stops to ensure that the lender gets convinced about your capability to service the loan including the interest.
Remember, the personal loan is an unsecured loan without any form of security or collateral and it is up to you to prove to the lender that you are not a credit risk!
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