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Why is Cash Flow Analysis Necessary For a Loan Application?

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Posted on: 02/14/18

Financial matter is the most crucial matter of a personís life, so, it needs some extra attention. You must analyse your cash flow every month to maintain a balance and parity in life. How much money you are earning and how and where you are spending that money? This analysis is essential before you apply for a personal loan.


If you have any specific need like purchasing home, purchasing car, expanding business, you can apply for those specified loans. But, if you need money just to fulfil your dreams or bear the daily expense, you can apply for a personal loan. No lender will ever ask you the cause of applying for a personal loan.

But, you should be aware of the fact that personal loan is an unsecured loan. You do not need to keep any collateral or guarantor to get the loan sanction. So, the credit score or the CIBIL score is giving much importance. You must have a good credit score of 750 and above to get a personal loan. This denotes that you have a good credit history.


Applying for a loan and getting a loan sanction is not the ideal option. You first need to analyse whether you can afford the loan or not. That is the reason you need to estimate your cash flow before you take a loan. If the analysis shows you have some surplus money, then you can afford the loan and repay the loan with that surplus money. But, you have a deficit, then how are you going to afford a loan?

You should never take a loan that will prove to be bad for you. A loan should provide you benefits. A personal loan is an unsecured loan, so the interest will be much higher than other loans. But, if you have a home loan, then you will get tax benefits even on our personal loan interest. That will be considered as a good move.



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