What do lenders look for in
a responsible borrower?

Borrowing is the act of acquiring something for a certain duration with an intention of returning it back. It could begin in the early school days where as a child you might have either borrowed a pencil, pen or some type of stationary from your friend and later money from various lenders. A monetary borrowing however comes at a certain cost.

India’s borrowing behaviour has been quite typical than the rest of the world. While most populations indulge in borrowing for their needs and wants, India has been historically only borrowing for fending for their needs. Some of the most common reasons for borrowing money included the purchase of land/home, buying goods essential for survival, gold for investment and for daughter’s marriage.

However, over the years, India has witnessed a transformation in this borrowing behaviour. More people are now considering the option of taking loans for smaller purchases like buying a smartphone or an LED television. Indulgence in luxury products like branded vehicles, fancy gadgets and more have also started becoming a trend. But with these great funding opportunities comes greater expectations of lenders. They have now prescribed a criteria for a responsible borrower which you need to fit in so to qualify for the loan.

Here’s a list of qualities that lenders look for in their ideal borrower -

5 Unique Traits of a Responsible Borrower

A responsible borrower is the one who is able to display the following traits in their actions and transactions too. Such people are not just the lender’s most preferred customers but also end up getting good deals on their borrowings. So here are the traits that you can inculcate to be a good borrower:

Is aware and has control over personal budget

Having a well-planned budget in place is one of the basic things every borrower should be having handy. A budget would comprise of your income and expenditure giving you a fair idea of how much more finance you would need. It would also give you a brief idea of how much equated monthly instalments (EMI) you can afford to repay on a monthly basis. A deficit in the budget means a strict no for the loan as you might not be able to repay it. Whereas a surplus or provision of repayment without straining the budget too much is a preferred situation.

Is good at research for choosing the best deal

In most cases, borrowers have more than one option of availing the loan. For example, you can consider taking a business loan or a personal loan depending on the corpus you need, the purpose of use and interest you wish to pay for expanding your business. You may also consider browsing through different lenders and their websites for comparing and selecting the best offer for you.

Doesn’t hesitate to take a financial advice

Taking a loan is often a big decision for most people. It not just adds to the debt but can also directly affect your credit history. Hence, if you are unsure about the type of loan or any other technical details, consider approaching a financial advisor for their suggestions. They would analyse your credit-worthiness and accordingly suggest you the loan offer that suits both your needs and your financial situation.

An honest borrower is the best borrower

Whenever a lender offers you money, they would like to know as much about you as possible. The most important thing they check is your level of honesty to them. If you disclose your details asked by them in a true and honest fashion, your chances of getting the loan at an agreeable interest rate become higher. The lender might also consider giving you a flexible repayment tenure once they are sure of your repayment ability.

Shares a positive rapport with the lender

Having a rapport with the lender even after the loan is disbursed to you is another desirable trait of a responsible borrower. This will come in handy when you are faced with unexpected situations like an emergency in family or finance and are unable to repay the EMI in a particular month. It would also be helpful in getting the best deals if you are taking an additional loan or an add-on on the present loan from the same borrower.

Responsible borrowers are just normal borrowers doing the basic things expected of them with dedication and sincerity. You need not undergo a training programme or attend workshops for it. Just following some basic finance tips mentioned above and inculcating these traits in your daily behaviour would make you a responsible borrower to your lenders.