Even with perfect financial planning, unexpected expenses can rise anytime. Fortunately, a personal loan can help you manage any last-minute costs. Even though getting personal is simple, the process has specific challenges.
Be it an emergency medical bill or a fancy vacation, a personal loan can be the best aid. You need to know the loan amount you are eligible for to determine how to obtain a higher personal loan.
But, evaluating the amount might be challenging for you. This article will discuss how to avail the highest amount on a personal loan.
Personal Loan Limit As Per Different Income Brackets
A personal loan is different for everyone. The essential contributing factor in availing of a personal loan is your earnings as an employee and a self-employed individual. Depending on the various income brackets, you can avail of the highest reasonable amount.
|Approximate personal loan amount
|Rs. 5.40 Lakhs
|Rs. 8.10 Lakhs
|Rs. 10.80 Lakhs
|Rs. 13.50 Lakhs
Factors Considered by Lenders When Approving a Personal Loan
Here are some vital factors that every financial lender will consider before approving a personal loan.
Since personal loans are unsecured, banks or lenders carefully sanction any requests. There are several ways to determine a person’s repayment capacity. The lender will investigate your past debts and loans and check whether you cleared them on time.
If the bank finds that you have an ongoing debt, they will check your salary. While comparing your salary to the total debt ratio, the lender determines if it is safe to approve the loan.
Collateral or Security
Most personal loans do not need collateral. But when the stakes are higher, the lender might ask you to submit collateral. Since you are borrowing a loan higher than your income bracket, the lender might be sceptical.
This is because sometimes, even the most financially stable people might fall short of money. So, the lender must ensure they have backed the personal loan amount with collateral.
The collateral asked by your lender includes available assets. These assets may include real estate property, business assets, vehicles, fixed deposits, etc.
The valuables represented as collateral will be under the bank’s hold until your loan is cleared. If you fail to pay the personal loan, the lender will sell those assets and recover their loss.
Both lenders and banks consider the borrower’s age before sanctioning a personal loan. They usually prefer the age group of 30-50 years.
This is because the people in this age group are well-settled. Because they have enough years ahead of them to generate income. It ensures that they have enough time to pay the personal loan.
Older people do not have a stable source of income. So, people above the age of 50 might find it challenging to get approved. And, the lender might need collateral to approve a personal loan for them.
Repayment Tenure & Loan Amount
Most of the time, banks and lenders prefer short repayment tenures. For instance, the lender will choose someone ready to pay the loan in 2-3 years instead of a person who opts for a ten years tenure for a personal loan.
But, if your loan amount is higher, the bank or lender might understand and give you a bit of an extension. The best thing is to opt for a shorter price if you want a higher personal loan amount.
Tips to Increase The Amount of a Personal Loan
You can avail of a higher amount on a personal loan by following these tips.
- Focus On Improving Your Credit Score
The credit score is a vital aspect of loan approval. Most lenders or banks check your credit score when you apply for a personal loan. Your credit score possesses detailed information about your spending habits. Lenders may investigate that to approve your loan application.
The credit score criteria to boost the personal loan amount can differ for lenders. Hence, you must check the parameters before starting to plan for a personal loan.
Keep a check on your credit score regularly. A better credit score increases your chances of getting a better loan, irrespective of your income bracket.
- Practice Money Management
Efficient money management is the key to a good credit score. You must keep a thorough track of all your existing credits. If you have any ongoing debts or loans, make timely payments and keep a check on all the credits.
Avoid taking unnecessary debts or loans if you do not need them. Increasing your debt repayments will increase your financial responsibility. In addition, you might even disrupt your credit score due to the number of repayments.
- Apply to One Place at a Time
Most people think applying to many lenders increases their chance of getting a higher and better personal loan. But in reality, it might just make things more complicated.
Lenders investigate your movement by an intra-institutional check. In this search, the lender tries to find whether you have applied for a personal loan elsewhere. If it comes to notice that you applied for multiple loans, the lender will most probably reject the personal loan application. The significant reason for rejection is that you might come off as desperate.
Most reputed lenders reject personal loan applications in similar situations. This is because the person comes off as hasty while trying to increase their credit.
People go for personal loans because of their simple and convenient nature. But when you want the best personal loan possible for yourself, you need to put in some extra effort. It is possible to get a higher personal loan amount. So, make sure you practice all the proper steps to avail of the highest personal loan amount.
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