Personal loans are the financial tools that assist you in managing unexpected and sudden cash requirements. They may also come handy when you have expenses lined up and planned for. If you have an expenditure with fixed tenures, personal loans are your best form of debt available.
Here’s are a few terms associated with personal loans -
FOIR (Fixed Obligation to Income Ratio) – What is FOIR?
Once you apply for a loan, the lenders introspect your credit history and profile to determine your capacity to repay the loan. FOIR, is one of the most used tools that lenders use to take into consideration an applicant’s eligibility and repayment capacity.
The loan provider will take into light the applicant’s monthly income as well as obligations. The applicant’s obligations would include the out-going debt repayments, such as instalments of all the ongoing loans as well as fixed liabilities, such as house rent. So, What is a Good FOIR Ratio? Different lenders consider different FOIR while lending but a FOIR of 40% to 50% is considered as the desired ratio.
Credit/CIBIL Score – What is a Credit Report? How is it Different from Credit Score?
CIBIL TransUnion, formerly known as the Credit Information Bureau (India) Ltd. was incorporated in 2000. This bureau accumulates your financial/debt records such as payments towards loans and credit cards. With the help of this information, it generates a credit report based on which they compute your credit scores. Lenders make use of this information to decide your creditworthiness based on Multiple factors.
Credit Report – It is a report that enlists the history of your past, on-going and closed debts, and payments details of each of the loan accounts, including credit cards. The report contains detailed information regarding the loan status and payments of credit cards. The report also gives information of whether the loans have been settled, partially paid, or defaulted.
Credit Score –The credit report formulates the base of the credit score. It generated out of the parameters in the report. It’s a statistically obtained 3-digit number between 300 and 900. This score determines your creditworthiness. Your credit score is one of the major factors used by lenders to be decisive about approving your personal loan or credit card. A healthy credit score ensures a higher loan amount and a better interest rate. In the case of credit cards, it helps the lender fix the credit limit. Higher the score, higher the credit limit.
Personal loans are one of the most trusted and dependable forms of debt that can be availed within a short notice and help you meet your cash requirements without any delay. When you are faced with a situation when you absolutely need the money and are out of options, it can put you in a jam. At such times, personal loans give you the option of borrowing and paying back in regular intervals. This will help you meet your financial requirements as well as it reduces the burden on your savings and monthly expense structure. A higher loan tenure personal loan can help reduce your monthly outflow towards EMIs. All you need is a personal loan with favourable terms of service from the best Personal Loan App.