Make Sure You Know Your Loan Eligibility
Whether you’re looking to apply for a personal loan, refinance your existing debt or take out a loan for a new purchase, you may want to make sure that you know your loan eligibility. You’ll find that there are many criteria that you must meet before you can obtain a loan, including your credit score, your debt-to-income ratio, your fixed obligation-to-income ratio (FOIR) and the minimum salary required.
Minimum salary requirement for a personal loan
Getting a personal loan is a great way to finance various things, from home renovations to education expenses. There are numerous lenders offering the service, though their requirements and benefits vary. Some offer loans up to $100,000 while others have minimum requirements that are much lower.
In general, lenders require a minimum monthly income of at least INR 20,000. Depending on where you live, your salary may be higher or lower. In addition, if you’re self-employed, you may be required to provide evidence of your income, such as tax returns.
A minimum salary is also important because lenders need to ensure that you can afford the monthly instalments. Some lenders require a six month employment history with your current employer, though it is entirely up to you to show your lender that you have a job.
Credit score requirements
Whether you are considering buying a new home or are a first time home buyer, your credit score may be the deciding factor in your decision making process. A high score can lead to better interest rates and lower monthly payments. The best way to achieve this is to shop around for the best mortgage rates in your area. For instance, a borrower may be able to qualify for a low down payment mortgage with a FICO score as low as 500. Similarly, a lender may not be able to give you the loan of your dreams if your credit score is in the tank. However, a lender will consider your credit score and the other relevant factors in your loan application before making a decision.
Fixed obligation to income ratio (FOIR)
Having a low Fixed Obligations to Income Ratio (FOIR) increases the chances of loan approval and better repayment capacity. This is especially true for first time home buyers who are looking to purchase a home. However, if the FOIR is high, the chances of loan approval can become quite low. This may be due to several reasons.
FOIR is a very important metric used by banks and other financial institutions to assess an applicant’s creditworthiness. It takes into account the applicant’s income, fixed monthly obligations and other aspects of the applicant’s financial history.
A high FOIR may indicate that an individual is overextended in debt or has a high debt burden. However, a low FOIR will show that the applicant has a higher disposable income and a higher repayment capacity.
Debt-to-income ratio
During the loan approval process, lenders will calculate your debt-to-income ratio. It is a calculation that helps determine how much of your income can be used to make your monthly mortgage payment. The higher your debt-to-income ratio, the more likely you are to have trouble making your payments.
Debt-to-income ratios can range from 20 percent to over 50 percent. It is best to pay as much toward your debts as possible each month, and avoid making large purchases.
To calculate your debt-to-income ratio, you should add up all your monthly debt payments and your monthly gross income. You should also include any rent, car payments, student loans, and alimony payments. This will help you create a realistic budget.
A debt-to-income ratio of less than 36 percent is ideal. In this range, you are able to afford your mortgage and other bills, and you have a healthy amount of income.
Nest egg
Having a retirement nest egg can provide you with an income after you retire. It is important to save for this goal as soon as you begin working. You can start by setting up a savings account. You can then make smart investments. If you are looking to invest in stocks, bonds or other high risk investments, it is a good idea to seek professional advice.
Having a retirement nest egg will allow you to enjoy a comfortable retirement. You can also make the most of your money by reducing unnecessary costs. It may take a little work to do this, but it can help you save more money.
It is possible to pay off your credit card bills using money from your nest egg. A personal loan from Best Egg can be used for a variety of needs, including home renovations, consolidating debt, and more.
