I’m New To Credit – Which Loan Should I Take First?

You've started earning and have finally experienced financial independence. It is exciting, but can feel a little overwhelming, as with this new phase also comes certain financial responsibilities.

It could be payment of your educational loan, rent, and other essential expenses. With a starting salary, it can be tough to set aside much for personal goals like a skill-building course or that long-awaited trip with friends.

At this point, you may start considering taking a personal loan, but you are not sure where to begin. If you are in this situation, you are in the right place.

This blog will guide you through choosing your first loan, providing all the essential information you need to know before and after taking one.

What Is The Significance Of Your First Loan?

Your very first loan does more than just work as a quick fix for your financial needs; it lays the foundation for your access to credit in the future. The right loan will help you:

• Fulfil your immediate financial need
• Help you build and improve your credit profile.

On the other hand, a hasty decision will:

• Stress you financially.
• Lead to missed payments and lower your credit score.

Simply put, your first loan isn't just a financial transaction; it's the first step to establishing your financial reputation with lenders.

Things You Should Have In Place Before You Apply For Your First Loan

Every lender has a basic checklist they go through before they sign off on the loan. You need to make sure that you check the following boxes before applying for your first loan.

• A stable monthly income: A steady income is the first thing lenders look for when you apply for a loan. In the case of an instant personal loan, there is also a minimum salary threshold. For example, Hero Fincorp requires you to have a minimum salary of only ₹15,000 to qualify, making it accessible to a wide range of applicants.
• A few key documents: You need a PAN card, an AADHAR card, address proofs, your salary slips (usually of the past three months), and your bank statement ready for verification.

Even though this is your first loan, lenders will still check if you have been paying all your utility and mobile bills on time, so make sure that you avoid late payments or defaults. If you check all of the above boxes, you should get your loan approved in no time, especially when applying through Hero Fincorp's Quick Loan App.

What Are The Ideal Loan Options For First Timers?

Now, to answer the big question, which loan should you opt for? The following are a few beginner-friendly options, especially if you don't have a credit history.

Instant Personal Loans

An instant personal loan is one of the most accessible personal loan types. In fact, there is a good chance that you have a few offers already lying unread in your inbox. What makes them a great option for first-timers is that these are unsecured loans (you don't have to put up collateral), and you don't need a credit history.

Two-Wheeler Loans

A two-wheeler is usually the first investment you make once you start earning, and a two-wheeler loan is a perfect entry point into accessing credit for the first time. These types of loans have a high approval rate, come with a structured EMI plan, and, more importantly, help you build financial credibility.

Get Your First Loan With Hero Fincorp

Your first loan is a financial milestone. That said, it's also a double-edged sword. The wrong one can derail your finances.

But if you are reading this, you now know what to look for and how to use the loan to your advantage. Whichever loan you decide to go with, always remember to repay it responsibly.

If you are ready to take the next step, use Hero Fincorp's loan eligibility checker for personal loans or the two-wheeler loan eligibility checker to see what loan you could qualify for.

Frequently Asked Questions

Can I get a loan if I have no credit history?

Yes, as a first-time borrower, you can get a loan based on your income and essential supporting documentation, even if you don't have a credit score yet.

What should I avoid while applying for my first loan?

Avoid credit cards (very high interest rates), secured loans (you risk losing assets), and co-signed loans (payment defaults affect your credit score even if you aren't the primary borrower) as your first loan.

What happens if I miss a loan EMI?

Missing an EMI will incur additional penalties like late fees and will also add a black mark to your credit report. The best way to avoid missed payments is to set up an auto-debit and ensure you have sufficient funds when the EMI is due to be deducted.