1. Take loans against security or collateral
A loan against collateral allows the borrower to place any personal property that has value and which they own, as an assurance against the acquired loan. In this case, if the borrower fails to make payments, then the bank has the right to sell the asset equivalent to the loan amount. Since the bank is at the lowest risk in this situation, the rate of interest for these loans is less.
2. Make use of your spouse’s score or bring a guarantor
You can also apply for a joint loan with your spouse, considering your spouse’s credit score is high, for personal loan application acceptance. Otherwise, you can also utilize a co-signer, who can sign jointly for a loan with you.
In both cases, if you fail to repay the loan, then the lender can demand the payment from your spouse or co-signer.
3. Conciliate on the interest rate and other charges
Many a time when your CIBIL score is low, most of the banks offer loans at high-interest rates. This is because the banks are at a higher risk of loss for the sanctioned amount of loan in such a situation. You can consider availing this when you are in some sort of emergency and are without any other option.
4. Show a good current income certificate
Certain banks consider your job stability as a factor for the lending loan.
If your CIBIL score is low due to default 5 years back and your current income is good, then you can readily get apersonal loan at the low-interest rate for a longer term.
5. Approach the Non-Banking Financial Institutions for loan facilities
There are some Non-Banking Financial institutions which offer loans to people, who have low credit scores and are struggling to break a cycle of poor credit. They are more generous than public banks in India.
It is always advisable to carefully regard this option because these institutions mainly charge you a high-interest rate, sometimes 25% – 35% but not bad when you need money badly.
6. P2P platforms
Peer-to-Peer (P2P) platform brings together individual borrower and lenders to take and offer loans. Here, screening of the borrower goes beyond the CIBIL credit score and is evaluated using other parameters such as current income, financial behavior, future financial prospects, education, demographics, socio-economic conditions, etc.
7. Improve your CIBIL score
If your requirement is not immediate then instead of opting for a personal loan at this moment, you should work towards bettering your CIBIL score and then apply for a loan. A better credit history improves your chances of getting another loan application approved in the near future.