Financial institutions in India continuously try to offer products that suit the specific needs of individuals within the minimal possible time. A chartered accountants’ loan is one such financing option that specifically targets the CAs in India.
Various lenders in India sanction CA loans with minimal hassle and time that help CAs to stay ahead of their competition. NBFCs have minimal documentation process and simplistic eligibility criteria which further makes the entire process faster.
Customers will have to ensure they fulfil specific criteria even though the process is easy. Some of these criteria are listed below:
1. Have a credit score of 750 or more
A healthy credit report and high credit score make a customer more appropriate for CA loans. Higher the credit score more is the creditworthiness of a customer. It is one of the crucial factors that lenders consider before sanctioning an unsecured loan.
Having a credit score of 750 or more is one of the quickest ways to avail a loan for chartered accountants easily. Such a score can also enable customers to get lower CA loan interest rate.
2. Provide all the necessary documents
Chartered accountants have to provide the following documents for availing these loans:
- KYC documents – Aadhaar, Voter ID, Passport, PAN, Driving License, etc.
- Address proof – Latest electricity/telephone/gas/water bill, house rent agreement, any KYC document with the permanent address.
- Bank account statement.
- Income tax returns, P&L account, and balance sheet.
- Certificate of practice that is active for at least 4 years.
Some lenders may also require other documents in addition to the above.
3. Fulfill all the eligibility criteria
The eligibility criteria for chartered accountants loan may differ with NBFCs. Customers may have to be between a specific age bracket with a consistent income.
Lower debt-to-income ratio
A debt-to-income ratio or Fixed Obligations to Income Ratio (FOIR) is the ratio between the fixed monthly debts of an individual to his/her income.
NBFCs prefer customers to have a ratio of 50% or below to become eligible for a CA loan. Such a FOIR ensures that the individual has ample cash in hand to pay the loan EMIs without defaulting.
Customers should also ensure the following when applying for CA loans:
1. They must not apply for multiple loans
Lenders will inquire for the credit score of a customer before sanctioning chartered accountants loan. Each inquiry will lower the credit score, and the same will get included in the credit report.
Multiple loans applications will make an individual appear credit hungry. It can also be a significant reason for rejection.
2. They must apply for a reasonable amount
Customers have to apply for a loan amount that they can repay easily. NBFCs may reject a chartered accountants loan application if an individual wants to avail an unreasonable or high loan amount.
Using a loan eligibility criteria can be one of the best ways to determine the loan amount. The calculator provides the amount based on the income, outstanding loan/credit card debts, etc. of a customer.
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