Is it possible to avail Loan without CIBIL Score? |
Posted: February 1, 2017 |
Till a few years back a credit rating had nothing to do with one getting a loan or not. Loans were sanctioned based on a host of other factors, some subjective and some objective and statistical. With the advent of credit rating agencies this process of sanctioning and applying for a loan changed drastically and mostly benefitted both the borrower and the lender. However what happens when individuals do not have a CIBIL score? Are they to be denied a loan and the benefits that come with it like the dream for higher education or to get a pair of new wheels? Getting a loan for CIBIL defaulters is tough because they have displayed irresponsible behavior in the past but what about someone who is starting on a clean slate?
Loans without a CIBIL Score: Options for the Borrower……
Whether a loan can be obtained with or without a CIBIL score will depend on the kind of loan and also a host of other factors like one’s employment history, income level and so on. Also we need to consider options that go beyond the popular private and public sector banks when trying to get a loan in the absence of a credit trail. So for someone wondering about how to get personal loan without CIBIL score we have a few ideas: Co-operative Banks and Non Banking Finance Companies can be a an Option: In case of no credit trail one should explore the option of borrowing from a non-mainstream bank. One could try and seek a loan from a NBFC or a co-operative bank. These institutions are more flexible in their terms and conditions but one must be prepared to pay higher rate of interest on these loans. Most co-operative banks will sanction a loan without a credit check. These banks offer higher rate of interest on deposits and in turns their loans are also available at higher rates compared to their counterparts. It is pretty obvious that someone with a good CIBIL score is unlikely to approach them for a loan so they are the last option for most borrowers in situations where they do not have a credit score, are on a loan defaulters list or have some other issue which prohibits them from getting a loan from other banks. Knowing an existing customer from such a bank can help you in getting a loan. Borrow against Existing Assets: If you need a loan and are unable to get one due to lack credit history then you can consider borrowing against your existing assets. You can borrow against bank deposits, shares/securities, gold, property, insurance policies etc. Borrowing against these assets does not require any credit check as the bank is lending against collateral which offers them security against a default. Each loan, taken against any asset comes with its own merits and demerits. While borrowing against a deposit may be the simplest, borrowing against life insurance policies or a house that one is living in, is highly avoidable due to obvious reasons. A life insurance policy and a house offer safety nets that should not be taken away. Consider Borrowing from Family/Friends/Peers: A loan is a loan whether from a mainstream bank or a known person. Prior to banking channels being introduced the money lender and family members and relatives/friends came to rescue when one required funds. This option still exists and can be utilized if so required. However one should make sure that they draw an agreement that lists out the borrowing and repayment terms along with the repayment schedule. This will give the lender some safety and he/she will be assured of getting his/her funds back. The borrower also stands to gain as there will be no ambiguity or cause of dispute later. However it may happen, that one relative/friend may not be able to offer you the kind of financial assistance that you require and you may have to consider borrowing from more than one person. A Co-Borrower Could Help You: Another way where family members can help you is by being a co-borrower in case you have no credit history. A co-borrower or a joint applicant is a person who applies for a loan along with the applicant and both are equally responsible for repaying the loan. So if you have no CIBIL score you could ask a family member (spouse/parent) who has a credit score to jointly apply with you for a loan. However the bank may insist on the member with the credit score becoming the primary applicant and may also insist that the asset be in joint names. Depending on the kind of loan and the bank’s policies there may be restrictions on who can become a co-borrower, about owning the asset and so on. Both the applicants should have clear understanding about the terms and conditions under which they agree to become co-applicants. So your dreams would not be put on hold if you do not have a credit history. You can still borrow from other sources and fulfill them.
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