There are plenty of factors that are
taken into consideration when you apply for a loan. However, not many are aware
of the different factors that can affect your loan applicant, simply because
there are too many to consider. One of the main factors is the EMI’s to income
ratio. In most cases of a loan application, if the total EMI’s are high, there
is a high chance that your loan application will be rejected.
So how can you reduce the chances of
a loan rejection, keeping in mind the EMI to income ratio? Here are some
suggestions that can assist you.
Managing
your EMI’s
The first step to lowering your EMIs
to income ratio is by managing your EMI’s. In the last few years, it is easy to
get tempted into opting for different loans for different financial
requirements. No doubt with loans such as two-wheeler loans, car loans or even
a home loan, EMI’s will help you get what you want. But how do you manage it?
The first step you should do is calculate your Emi’s to income ratio. You can
always use the loan EMI calculator for this purpose. This ratio should not be
over 50%. However, that does not mean you should also try for a loan amount
that will touch this high of a ratio. You will need to consider your daily
expenses along with the possibility of the different taxes you will need to
pay. By reserving 20 to 30% for you income, for EMI’s you can ensure a low
ratio, thus reducing your chances of a loan application rejection.
Borrow
wisely
Debt may seem like the end of the
world for you, but in reality, it help keeps you financial focused. However, as
long as you ensure that the debt is something you can eventual manage, you
should not be worried. In this case, when opting for a loan, you must borrow
wisely. Match your debts to your income. If you discover you are spending more
than what you earn or expect, then you need to make adjustments. If you need to
borrow funds, ensure that you need to borrow it for realistic and practical
purposes. Avoiding takes a loan to further invest in other financial products
such as the stock market or other equities.
Plan the
tenure of your loans
All loans work on a simple formula.
The longer the repayment tenure, the more money you will end up paying in
total. Depending on your financial profile, you can always opt for a high EMI
over longer repayment tenure. Even funds from your bonuses or promotions will
help you pay off a higher EMI, thus reducing your repayment tenure. Use the loan
EMI calculator to calculate the ideal loan tenure that will suit your needs
while helping you repay your loan off in ease.
