How does my current financial situation influence loan terms?

Your financial situation has a direct impact on the loan terms you get. Lenders check your monthly income, job stability, credit score, and existing debts. If you have a steady, higher income and a low debt-to-income ratio, you’re seen as less risky. This can get you a lower interest rate and a bigger loan amount. A strong credit score shows you pay bills on time, which makes lenders more willing to offer you better terms. If your credit score is low or your income is unstable, you might get a higher interest rate or a smaller loan.

Lenders also look at your repayment history. If you’ve missed EMIs or defaulted before, it can hurt your chances. They want to know you can handle the extra loan without trouble. In 2025, most lenders want to see a minimum CIBIL score of 725 for unsecured loans. They also check if your existing EMIs are less than half your monthly income. If you meet these criteria, you’re more likely to get favourable terms. To improve your chances, pay off other debts, keep your credit utilisation low, and make sure your financial records are in order before applying.

You should also review your employment documents and bank statements before submitting your application. Keeping all paperwork updated helps avoid delays and improves your credibility with lenders.