Loans, secured and unsecured, are a primary source for individuals requiring funds for a new home, education, or personal usage.
A lender’s primary concern is that the money forwarded as a loan should be repaid per the schedule. Besides documentary proof or collateral,the customer’s profile is vital. The application form for a loan requires both personal and professional details,which help the lender decide whether the applicant qualifies or not. Fillout the application form for a loan carefully with valid information which matches the documents submitted.
Details are asked regarding the applicant’s source of income and personal information,which contribute to the decisioning of the loan. Significant questions include the following:
What is The Vintage of Employment or Business?
The applicant’s source of income is a priority for the lender. A regular income will ensure financial stability for repayment of the borrowings.
The applicant, if salaried, must be working for a minimum of 12 months to be eligible for a loan. They will be quizzed about their employment history and change of jobs. If there has been a break in employment and if so for what reason? The applicant may be asked to submit documentation of previous jobs as proof of continuous work.
For self-employed individuals, the business entity must have a vintage of 5 years or more, with a consistent turnover and profit. The company must be registered with the MCA with all required certifications.
What is The Nature of The Business/ Profile of The Employer?
The nature of the business of Self-employed persons and business organizations is vital to the lender if the business profile is considered nonprofitable and risky as per the financer, the loan will not be processed. Specific business profiles may be supportive, while others could be regarded as ‘negative’ and thereby not fundable per policy.
The current employer of salaried applicants must be in the approved company list of the financer. Most Banks will happily fund the employees of the Economic time’s Top companies, profitable ventures having a high turnover and Government staff. At the same time all Banks may not fund applicants employed with proprietorship firms.
What is The Loan Amount Needed?
Give a thought to the loan amount you want to apply for. It should be commensurate with your income so the EMI can be easily repaid.
The need for funds may be in excess, but the loan amount given will be as per the eligibility calculation criteria of the financer. When filling in the loan amount required provide a realistic figure in sync with the earnings that the financer will be comfortable lending.
A Home Loan or mortgage is calculated by considering the property’s cost and the applicant’s income. Other EMI being paid and existing credit will be taken into account.
The amount approved as unsecure depends on the pay of the applicant, mandatory monthly expenses and other obligations, loans, and credit card bills.
Use our EMI Calculator to check if the EMI is affordable before requesting the loan amount and repayment tenure.
How Will The Money Be Used?
This is the most crucial query the lender will want to know the end users of the funds given. The applicant will be questioned in detail to verify the purpose of the loan.
For a Home Loan, the amount is meant for purchasing a residential property. When disbursing the loan amount, the lender must provide proof of purchase and an advance payment receipt.
The loan amount will be given directly to the seller for a ready-to-move property and funds will be forwarded to the builder if the property is under construction.
For a mortgage, the net is more comprehensive a loan granted against property, or LAP as it is popularly known can be used for business, for further education of children, or the construction of residential or office premises. As the case demands, the payment order is made in the customer’s name or company and can be used at the customer’s discretion.
A Business Loan is meant to be used to further the business, buy equipment, and for expansion the applicant must be able to give details to support the request as to how the funds will be deployed in the business venture.
A Personal Loan is meant for personal usage, emergencies, vacation, home renovation, a family celebration,or wedding expenses.
Before sanctioning a Personal Loan, the underwriter must be convinced that the funds will be used appropriately and will question the applicant to ensure that the applicant has a genuine need.Funds granted via a personal loan cannot be used for investment or starting a business, or nefarious activities.
Confirmation Check Regarding The Applicant’s CIBIL History
Before sanctioning a loan, the CIBIL of the applicant will of the applicant is checked. The applicant will be asked about the existing loans as reflected in the CIBIL if there are any delays in repayment in the past, pending loans,or credit card bills., At this juncture, the customer will get a chance to clarify If there are any errors or missed updates.
The CIBIL records the details of all credit used from the start, and the applicant must be clear and accurate about all inquiries regarding credit usage.
For how many years have you been living in your current residence? Is it self-owned or rented?
Stability and Contact ability are the bywords for getting credit. An applicant who has been residing in the same premises for several years or has a self-owned property has a permanent base will give a sense of comfort to the lender.
A self-owned or family house has the added benefit of no rental expenses and adds points to the profile.
The underwriter will confirm the residentialst at us,and a physical verification will be conducted to verify the details. Documentary proof for ownership can be requested if the requirement for the loan amount is in excess.
How many members are there in your family residing with you? Are there any other earning family members?
The number of persons supported by the earning member will make a difference to the allotment of expenses. First, the mandatory and lifestyle costs must be covered, like education expenses for children and household expenses for the family. Surplus funds are used to pay for EMI or luxury spending.
The applicant will be asked about his children, spouse, and parents living with him and if other earning members help support the family.
Banks and NBFC also club the income of a spouse or blood relatives to increase the eligibility for funding extra loan amounts.
The applicant can submit proof that there is a regular income from other sources, such as rent or commission, which can be added to the income criteria to increase eligibility for a loan.