Top 7 Factors for Loans

Lenders have tightened their rules on who can borrow and how much money they can borrow. It is important to know how much home you can afford. Lenders use different criteria to qualify borrowers. They might start with your credit score, the following are the factors influence borrowing decision. 

Income and Commitments

To determine exactly how much you can afford in repayments, they will look at your income as well as any outstanding debts and other commitments you have. In addition to looking at your income, your lender will also review your current commitments, which includes all of your outstanding debt, credit cards, personal loans, car finance and any other ongoing financial commitments you may have.

Interest Rates

Shop around and do the math as interest rates vary across banks. For instance, public sector banks' MCLR are in the range of 8.45-9.45 percent. For new private sector banks it is in the range of 8.4-10.38 percent. For small finance banks it's even higher at 12.5-15.65 percent. Remember to bargain for a favorable rate if you have a good credit score.

Banks, however, may or may not lend at MCLR. They may ask for a spread or a mark-up or a margin. The actual home loan interest rate can be equal to the MCLR or have a 'mark-up' or 'spread', but can never be lower than the MCLR. The usual mark-up is in the range of 0.25-0.5 per cent, though it may increase if the credit profile of the borrower is shaky.

Credit Scores

There are 4 credit bureaus in India they are CIBIL, Experian, Highmark and Equifax these credit bureaus will have a credit history of every lender which will range from 300-900. The agencies analyze how faithfully you repay credit cards, among other financial activities. Your credit score is always changing rising when you pay debts meticulously, falling when you fail to pay debts on time, run up big balances or use too many different credit cards. It pays to learn what factors matter when you are trying to improve your credit score.

Lender's Reputation

Lenders reputation can also be considered at the time of borrowing. This happens when you want your lender to be efficient enough in processing your loan. This helps to ensure that you get your loan amount on time.

Pre-Payment charges

You can foreclose a loan by prepaying the entire outstanding amount. In part-payment, you prepay a portion of the outstanding amount. Make sure you are aware of all charges associated with prepayment, so as not to incur high costs should you opt for it. Find out if there is any lock-in period associated with the option wherein no prepayments are allowed in the first 12 months or so.

Savings and Investments

Lenders might want copies of bank statements, investment statements, and retirement account statements, both current and from two or three years back. This factor is often important for retirees.

Switch Loans

Banks often offer lower rates to new customers but charge existing customers higher rates. Be on the lookout for changes in interest rates. If another bank is offering a better rate, it makes sense to switch loans. But the difference should be considerable enough; otherwise the switching and processing charges will eat into the gains from the lower rate. Switching is more beneficial if done early in the loan tenure. It is not so beneficial if the loan is at the end of the tenure. 

You can apply for an attractive offer with best possible Rate of Interest and Terms for Personal Loan, Business Loan , Home Loan and Car Refinance Loan.

FundsTiger is an Online Lending Marketplace where you can avail fast and easy Home, Business and Personal Loans via 30+ Banks and NBFCs at best possible rates. We will also help you to improve your Credit Score. We have dedicated Relationship Managers who assist you at every step of the process. We can also help you in Balance Transfers that will help you reduce your Interest Outgo.