When one wants to avail a loan, the borrower often has multiple choices, starting from Banks, Non-Banking Financial Institutions, Credit Cards, P2P online lending, Traditional private money lenders and others. But despite all these diverse options to choose from, borrowing money is not as easy as it might sound. Given to the rigid rules that are laid down by every institution, procuring a loan can be a tedious task.
Some of the general criteria that are set as eligibility factors for the borrowers by all lenders are:
· Work experience of the borrower
· Whether the borrower works with a reputed institution
· Does the borrower has a guarantor
· CIBIL credit score of the borrower, and others
Apart from this, most of the lending organizations and banking organizations have their minimum loan amount, whereby it becomes difficult for the borrowers to avail quick loans at a low-interest rate. In fact, borrowers seldom get the freedom to choose and are hence forced to go for the available options set by the lenders.
However to be a successful lender, here are a few other points that must also be kept in mind, apart from the above stated facts, to know that your money is in safe hands:
Understand the Requirement of the Borrower
Good borrowers always must explain to the lender, the nature of their trade and what the factors are that can influence their business. Respectable borrowers always maintain a relation with their bankers, those who understands their business.
Lend To Borrowers with Stable Income
When lending money for long-term, since you never foresee what unexpected events may happen to the borrower, it’s best to lend to people who have stable income. Good borrowers with stable income, always plan their finances and have worthwhile goals.
Have a Good Loan Repayment History
Good borrowers always have a sense of integrity. They pay back the agreed sum in time. Often it’s one of the most overlooking traits sought by the lenders from the borrowers who are availing their funds.
Hence good loan repayment history is a must before lending your money to the crowd.
Prefer giving a 36-month (3 years) loan
As increasing the tenure of the loan, also increases the interest rates, most of the knowledgeable borrowers prefer to stick with a 3 year loan. So consider providing loans to people who are seeking 36 months loans. Since most of the time such borrowers are more consistent in making their payments on time than those who lends for longer times.
Look For Social Networking Links
Another way for finding the reliability of your borrowers and to know as to whom you are lending is to find out about your borrowers from social networking sites like Facebook, LinkedIn and Twitter. It has been observed that verifying borrower’s credentials online through these platforms, often provides the lenders with better insight about the borrower’s personality and their personal traits.
Look for Educational and Family Details
Last but not the least, academic credentials and family background of the borrowers is another way of understanding as to where you are risking your funds. It has been seen that borrowers who comes from good family ties and are educated, generally keeps up to their obligations and have a better sense of integrity than people who are uneducated or have controversial and shady family upbringing.