In today’s financial market, there are a lot of financial products available in the market. Loans are one of them. For every need, you have a special loan which is tailored for the same. For purchase of a car, you have car loans. If you want urgent funds, you have gold loans with attractive interest rate schemes. Similarly for purchase of a house you have home loans with attractive home loan interest rates. But, is getting a loan that easy?
There are a lot of factors which helps the bank determine if you are credit worthy. Different banks and non-banking financial companies have their own protocols to decide if they can lend you money when you apply for a loan or a credit card.
For example, you and your friend apply for a car loan at the same time. Both of you chose the same car model, the manufacturing date is also same and almost everything related to the car is same. You both apply for a loan with the same bank as well. The loan gets sanctioned and there are a lot of congratulations between you guys and suddenly you come to know that your friend has been offered a lower interest rate than you on the car loan. It triggers a lot of questions in your head like, how is that possible. Did the bank favor him more? Did he go for a different product? Such questions will keep bothering you, until you get the right answers.
Today we will sight you some points on why the banks do not offer the same interest rate to all loan seekers.
Your age matters
The very first criteria when deciding on a loan is the age. In banking terms, the younger you are the more loans gets sanctioned at attractive interest rates. But on the other hand, if you are old enough or retirement is just around the corner you may end up getting your loan denied or if by any chance you get the loan, the interest rate will be on the higher side.
With age as criteria, the lender also checks your stability. In this case, stability means how frequently you change jobs or how long have you been in the same company. What are the scales of increment you got in the past, etc? If you are in the same organization from a very long time the bank will give you loan at an attractive interest rate, on the other hand if you job hop frequently, you may end up paying more interest than market standards.
Income and gains
The lender always checks your inflow of money so that they can determine if you are credit worthy. They check all your incomes and gains at the same time all your existing debts and line of credits. For example, if the total EMI of different loans results to 50% of your salary, then you may end up paying more interest for a new line of credit. The less your loans are, more the banks will approach you to offer loans and that gives you an upper hand in getting the loan sanctioned at low interest rates.
This is the most important aspect while determining if you are eligible to get a loan or not. If you have maintained a healthy credit score you will get attractive offers and schemes in regards to loans and other financial products. A good credit score can not only boost your chances to get the loan in no time, but also can get you the most attractive interest rate ever. A lower credit score can not only damage your financial reputation, but also can act like a financial block to all your future transactions. On the other hand you can get a personal loan for cibil defaulters, but the interest rate will be sky rocketing.
What’s more important is that how you maintain your financial transactions which can lead to a good credit health.
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