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Are you aware of these factors that can affect your loan application?

At a time when you have an urgent and large financial requirement, the loan will prove to be the ideal option to satisfy this requirement. No doubt, when you are applying for the loan, you will consider factors such as the principal amount, interest rate and the repayment tenure. There are other factors that you need to consider, such as the down payment, collateral, EMIs and even the eligibility criteria.

All these factors in total, will have an important role to play when determining the ideal loan that will suit your financial requirement. Given below are a few important factors you need to consider when applying for your loan:

Eligibility criteria:
While there are plenty of different types of loans available in the market, each of these loans come with different features, add – ons and risk levels. When applying for any of these loans, as a borrower, as a rule you will be required to repay the borrowed funds and interest, within the given period. But from a lender’s point of view, there will always be a risk of the borrower defaulting. In order to combat this risk and reduce the chances of defaulting occurring, lenders often include an eligibility criteria when applying for a loan. If you satisfy the eligibility criteria, you will be automatically eligible to get the best loan rates.

EMI calculator
When you apply for a loan, you focus on your financial requirement. However, in the end, you will still be required to repay back the borrowed funds along with the interest rate, within the given tenure, through EMI’s. But planning the right EMI is a crucial step, as it allows you to have sufficient funds for other daily expenditures or emergency financial requirements. By using the EMI calculator, you will be required to calculate the EMI that will help repay back the funds as well provide you with sufficient financial corpus for other requirements.

Collateral
Unlike other loans, a borrower will need to provide a collateral when opting for a secured loan. Depending on the value of the collateral, other influential factors such as the interest rate and the principal amount will be determined. Normally, when you apply for a loan to purchase a particular entity, such as a home or a car, these objects themselves are used as collateral. However, you can add additional collateral to get a loan amount that will suit your financial needs.

Down payment
As a part of the secured loan application process, you will need to provide a small amount of the value of collateral being purchased. This amount can be anywhere between 20 to 30% of the loan amount. The higher the down payment, the more favorable will be the loan rates. You can even use the EMI calculator to calculate the EMI and the down payment you can afford.

While there are plenty of other factors that can affect your loan, these are the important ones you need to consider. You can always approach your lender to know more.

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