A personal loan comes under the list of liabilities and is said to cause a financial burden on the borrower for a fixed period. Some specific rules and regulations are necessary to follow to get benefited from the schemes and offers related to personal loans. Every financial institution or lender might release its specific guidelines to comply with the borrower.
Some of the essential guidelines that are issued by lending institutions:
- Annual income: The first significant element that needs to be taken into consideration by the lending party is to know the actual annual income of the borrower. Along with the application form, a copy of documents stating proofs related to the income of the person is needed to submit with the lending institution. The source of revenue should be clearly stated in the loan application form. The credit is given to those who have a fixed source of income every month and can pay the Equal Monthly Installments (EMIs) without much hassle.
- Age of borrower: Age is the second important factor that needs consideration while offering any kind of financing facilities to anyone. Persons above the age of 21 are privileged to get personal loans as they will be able to pay their interest and amounts by earning on their own. Hence, it is vital to verify their age that is mentioned in their documents. It also needs to be checked carefully and matched with other certificates of the candidate. The candidate should rectify differences in the age of any two or more materials before applying for the loan.
- Credit history: The credit giving company is suggested to keep in mind the past financial records and status of the candidate before providing them a personal loan. If the interested candidate has been an appreciating debtor in his recent financial transactions and payment, he is said to have a high credit score. A credit score shows the creditworthiness of the candidate for the repayment of the loan. Higher credit score means higher chances of trust on the borrower.
The final suggestion: It is frequently noted that a person avails the loan in the first place, but becomes unable to pay the EMIs due to negligence in saving money. Therefore, spendthrift is advisable to follow all the legal proceedings of the loan facilities and respect the guidelines issued by his concerned financial body.