Bank Loan

How can I get a loan?

Loan is to bridge cash flow gap. If there is an earning stream , subject to investment, loan can fill the gap between available fund and required fund. Normally banks insist on significant contribution by promoter , so that risk is less for the bank. Further there should be surplus generated from the venture , so that the cost of capital is covered by the surplus generated over a period of time. Lenders also look for security, so that in case the obligor defaults bank can cover the loan by sale of the securities lodged. There are different loan ,w.g corporate loan, consumer loan, agriculture loan and sanction process is separate for separate type of loans.

Obtaining a personal loan is based on three criteria:

1. Your credit scores

2. Your historic income

3. A good purpose

Assume this question speaks to a bank loan and not a credit card. I will also assume that this is for a personal loan and not a business loan.

There are many places on the Internet to find out how to obtain credit, what effects credit scores, and how to keep high credit scores (680 +). Suggest you become your own expert on this subject.

Banks want to see that a person has the ability to pay for a loan on a monthly basis. To meet this criteria, the person must show income stability or income growth over a minimum two year period. Why this lengthy period? Because the bank wants to make sure that you have a stable employment history and that this employment history shows excess income to pay for a loan.

What is excess income? Income not needed for your personal expenses. And, the bank will use something called “Debt to Income Ratio” to determine if your income qualifies you for a loan.

Banks use a percentage figure as the criteria for the ratio. In other words, a bank will set a maximum ratio (say 50%) for what all of your expenses need to be as compared to what bills you have to pay and then another ratio which includes the loan payment.

Purpose seems self evident. You have to have a purpose for borrowing the money. And, if this will be your first loan, think in terms of borrowing way lower then your maximum ratio(s) will allow.

The above information is basic to a personal loan. A business loan has its own set of basics as well as specific criteria depending on the purpose of the business loan.

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Eligibility criteria required for Personal Loan by Rajesh Singh:

Getting personal loan is very easy if you are meeting all eligibility criteria. Many banks and NBFC are providing personal loans.

Eligibility criteria required for Personal Loan

Age Criteria: The younger you are, there is more probability. General guideline followed by most banks for personal loan for salaried employees is they must be between 21 to 60 years aged. However for self-employed it is between 25 to 65 years.
Employment Stability: This is a very crucial aspect for personal loan consideration. Unless you are salaried and employed for more than 2 years in the current profession or if self-employed minimum 5 years of total tenure of earnings, you will not be considered as eligible.
Credit Rating: Apart from your company’s performance, individual credit rating holds a lot of value. Having good credit rating increases the probability of getting loan with more flexible option on tenure, amount, EMI and interest rates. In case of any default payment records, huge outstanding loan, fraudulent track records, the banks has every right to cancel the loan or charge higher interest rate. CIBIL score should be above 750.
Financial Situation: It’s not always about the present, the past financial records will also have a great call on deciding whether you are eligible for a personal loan or not. Having good financial records is the key, will eradicate rating issues and will increase the total amount eligibility. Monthly income should be 50k per month.
Employer: The employer with whom the applicant is working with is the best way to gauge the credibility of the applicant. Being a part of reputed and high turnover companies is an asset when it comes to applying for personal loan.

Here is the list of common documents that should be submitted irrespective of which bank you are applying and where you are located.

Complete loan application form with one passport size photograph.
Valid Proof of Applicant's Identity: Voter ID card, passport, pan cad, driving license.
Proof of Residence: Ration card, passport and utility bill.
Proof of Age: Voter ID card, passport, pan cad, driving license.
Financial Documents:
a. Salaried Individuals: Latest 3 months’ Salary Slips and Form 16, bank statements for 6 months
b. Self Employed Individuals: Latest 1 year bank statement for both savings and current account

If you are applying for personal loan then compare the interest rates and apply for best bank.

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