Know how to avail of a Personal Loan with a low salary
The non-uniform growth rate of the Indian economy has resulted in a gap between the increasing living cost and rising aspirations of the country’s middle class. This has further led to a growth of the personal loan segment. According to the Reserve Bank of India, this particular credit segment witnessed a 13.5% year-over-year growth in March 2021 (1).
While individuals with an adequate income can easily acquire this unsecured credit instrument, some reputed lenders extend low salary personal loans. Prospective applicants with low salaries must be aware of the vital aspects of acquiring this loan successfully.
How can an individual with a low salary acquire a personal loan?
An individual with a low salary will find it difficult to get approval for an instant personal loan. However, prospective applicants earning a low salary can opt for the following ways to get their loans approved:
- Maintaining a high credit score
The CIBIL score is imperative for determining an applicant’s chances of acquiring a personal loan. This score is even more critical in cases where the loan applicant’s salary is low. Therefore, individuals must ensure they possess a decent credit history and CIBIL score to boost the chances of getting their loan approved without any hassles.
- Applying for a personal loan along with a co-applicant
Getting approval for a personal loan depends on many factors like credit score, current liabilities, income, etc. A primary borrower can find it challenging to qualify for this credit instrument because of a low salary. In such scenarios, they can choose to apply for a personal loan along with a co-applicant or co-borrower. A joint application can help improve the overall eligibility of the borrower.
However, individuals willing to apply for a personal loan must note that financial institutions do not just allow anyone to be a co-applicant or co-borrower for a personal loan. In general, only an applicant’s parents or spouse can function as co-applicants. Some reputed lenders allow siblings to be co-applicants as well. Prospective applicants must check with their concerned financial institutions whether or not they offer any such provision.
When a primary borrower adds a co-applicant, the lending financial institution considers the joint income. Thus, the co-applicant’s salary can bridge the gap.
Moreover, the addition of a co-applicant with a substantial income might make the borrower eligible for a greater loan amount at a lucrative interest rate.
- Opting for a lower loan amount
While a personal loan can provide an individual with substantial funds, applicants with a low salary can apply for a lesser amount to receive approval for quick loans. Prospective applicants can use a personal loan calculator to make an informed decision regarding their loan by varying the loan amount, tenor, and interest rate.
This calculator lets individuals know the payable EMIs beforehand, thereby helping them manage the personal loan EMI repayment efficiently. This leads them to repay the credit punctually, which adds to their creditworthiness.
Besides this tool, individuals can use an instant loan app extended by reputed lenders to apply for this credit instrument instantly.
Factors to consider while acquiring a low salary personal loan
Besides knowing the various ways to obtain a personal loan despite having a low salary, individuals must consider certain factors while opting for this credit instrument. These are:
- Opt for the best possible rate of interest
Individuals must acquire a low-salary personal loan at the best possible rate of interest. This is because the interest rate significantly impacts an individual’s financial health. The total interest outgo is higher over the loan tenor when the applicable rate of interest is high. This leads an individual to pay a much higher price while servicing the loan. This will be better understood through the following example:
Suppose an individual acquires a loan amounting to Rs. 12 lakh. For a loan tenor of 2 years (24 months) and an interest rate of 13%, the total EMI payable will be Rs. 57050. If the interest rate increases to 15% for the same amount and same tenor, the payable EMI will rise to Rs. 58184.
Applicants can use a loan app offered by trustworthy lenders to acquire this credit instrument at an affordable rate.
- Evaluate the associated charges
A loan comprises many additional charges like foreclosure costs, processing fees, etc. Individuals must assess the various applicable costs before closing a loan deal.
Apart from these, borrowers must ensure that they acquire a loan from a reputed financial institution. Renowned lenders extend several offers, which can significantly benefit the borrowers. This includes many pre-approved offers that are extended on both secured and unsecured financial products. These offers help simplify and accelerate the lending process. Individuals can check their pre-approved offers by providing a few details, such as their name and contact information.
Thus, prospective applicants can opt for any of the ways above to acquire a low salary personal loan.