There are basically two types of loans – secured and unsecured. Secured loans have assets like mortgages – like a house for a home loan, a car for a car loan, etc. While unsecured loans have no such requirements – like a personal loan, credit card loan, etc.
Since some assets are held in the form of a mortgage, secured loans are easier to obtain and are also cheaper than unsecured loans.
On the other hand, without underlying assets, unsecured loans are more difficult to obtain and are also expensive.
Also, without any assets held as collateral, banks and non-bank financial companies (NBFCs) ensure that borrowers have the ability to repay the loan.
Since salaried people have a regular income, they can pay the equivalent monthly installment (EMI) without much difficulty and have a better chance of availing unsecured loans.
“Any bank or NBFC that lends money obviously needs the amount to be repaid. The most important criterion is therefore to ensure that the borrower has the means and the intention to repay the loan taken. Employees Employees then invariably have an advantage over non-employees in terms of easy access to loans,” said Anil Pinapala, CEO and Founder of Vivifi India Finance.
Even among salaried employees, a person with more seniority and job stability is more likely to get a sanctioned loan.
“There are factors that personal loan providers take into account. To get the loan, you need to make sure you qualify for the same,” Pinapala said.
Pinapala lists some of the factors that influence eligibility to get a loan –
Your current income plays the most important role in determining your eligibility for a personal loan, as your repayments depend on it.
Your payment burden is another important factor. Providers need to know if you are already overloaded or if you still have room to play. This again depends on your debt ratio.
Additionally, your credit score determines how easily you qualify for a personal loan, as it reflects your personal finance management skills as well as your responsibility for repayments. So, if you have maintained a healthy credit history, rest assured that you are in good standing for a personal loan.
Additionally, while vendors verify your details, they also review your business profile and reputation.
“To reiterate, your stable income, employer, place of residence, payment burden and credit history all assess your eligibility for a personal loan,” Pinapala said.