Leading lenders rarely disburse financial products to individuals classified as CIBIL defaulters. Even if they do, the interest charged can be higher on a low credit loan. The potential reason for rejection of the application is the financial credibility of the applicant. Lenders evaluate the loan repayment capability based on the credit history of any applicant. A CIBIL defaulter is naturally considered as an individual who is not creditworthy to avail a loan.
What do you Mean by CIBIL Defaulter?
Credit bureaus maintain a credit report of an individual based on his/her credit history and financial responsibility. Based on these pointers, they assign a 3-digit score called the CIBIL score. The CIBIL score lies in the range of 300 to 900. Now, a CIBIL defaulter is an individual with a CIBIL score of less than 750.
Subsequently, there is no list for credit defaulters. Financial institutions turn down loan applications based on the low CIBIL score. And thus, borrowers seek answers of how to increase CIBIL score. Ideal or good CIBIL score help for instant approval of the loan.
How to Avail a Loan Against Property?
Loans against property can be considered as the feasible most method of availing finances for individuals with low income or low credit score seeking emergency funds. One can keep their residential or commercial property as mortgage and avail a loan against it. Since it is a secured loan, lenders have the assurance to meet outstanding dues by liquidating the pledged asset in case of non-repayment or default.
Hence, financial institutions and NBFCs approve a secured loan for a low CIBIL score. As such, a loan against property comes up as the most suitable financial product.
Here are the basic pointers to know before applying for a loan against property, especially for a CIBIl defaulter.
- Ensure you qualify the required eligibility criteria
- Candidates employed with an MNC, public, or private firm within the age range of 33-58 years.
- Self-employed professionals between 25 and 70 years of age.
- Own a property that can be mortgaged.
- Opt for a low loan amount
Lending a high amount of loan to CIBIL defaulters is a liability for any lender. Applying for a too-high loan amount can increase the chances of rejection. Instead, availing a low credit loan increases your chances of loan approval.
- Apply for a loan with a long tenor
The tenor for a loan is critical in the calculation of equated monthly installments (EMIs). Low EMIs for repayment eases the financial burden for a month. Subsequently, one has more chances of improving their credit score. Even though several financial institutions and NBFCs approve CIBIL defaulters a loan against property, one should know how to improve cibil score.
Financial institutions and NBFCs provide an extended range of tenor to aid borrowers availing secured loans considering the high loan amounts disbursed. NBFCs like Bajaj Finserv offer extended tenors up to 20 years as well as numerous other repayment-friendly benefits with their Loans Against Properties.
They also provide pre-approved offers on such loans to ease the procedure of application and to reduce the time required to avail them. Such offers are available on a range of other financial products and services as well, including personal loans, business loans, home loans, etc. Submit a few simple details like your name and contact number to check your pre-approved offer in seconds.
- Produce the following supporting documents in favor of your application
- Proof of identity like PAN card, Voter ID card, Passport etc.
- Proof of address such as voter ID card, Aadhaar card, utility bills like electricity, water bill, ration card etc.
- Recent salary slips for individuals working in MNC, private, and public firm.
- Salaried individuals should produce the last 3 months’ bank statements.
- Self-employed individuals should produce last 6 months’ bank statement.
- Copy of property documents to be mortgaged.
- Income tax returns.
- Form 16 for salaried employees.
- Apply for a loan with co-applicant/guarantor
Most leading lenders do not prefer approving loans for low CIBIL score, even in case of secured loans. Hence, applying for the same loan with a co-applicant who has a decent CIBIL score is the only way for approval. Also, a guarantor can help avail a higher loan amount and lower interest rates. Note that some lenders only consider co-applicants for a secured loan if he/she is a co-owner of the property to be mortgaged.
Even though availing a loan against property for CIBIL defaulters is possible, one should always try to improve their credit score by –
- Applying for a secured credit.
- Repaying EMIs on time.
- Availing long tenor loans.
- Repaying credit card dues on time.
CIBIL defaulters applying for low credit loan can increase their chances of loan approval by adhering to these points. While applying for a low amount increases the chance of approval, securing a guarantor can increase the viability of your application. Nevertheless, one should always stick by the legit rules to improve their credit history. Thereon, follow a step by step guide to avail a loan against property and keep the above-discussed pointers in mind to prepare for application.