What’s Your Personal Loan Eligibility? Know it Here
A personal loan is an unsecured loan offered by both banks and non-banking financial institutions to any eligible individual. It is crucial to be aware of your personal loan eligibility details as this will shorten and speed up your application process. The criteria vary from bank to bank, and they have separate minimum standards fora credit score, income, age, employment type, job status.
As per a recent report, many people in India apply for a personal loan to fulfill their travel plans. Failing to meet the required eligibility can lead to the rejection of the loan application. Regardless of your occupation or profession, it is essential to check your eligibility before approaching banks. Many banks also provide a personal loan eligibility calculator online to also determine the EMIs to be paid for a specific loan amount. You can match your requirements with your repayment schedule using such personal loan calculators.
Factors that Affect Personal Loan Eligibility
• Age
The younger you are, the easier it is to get a personal loan as you have many earning years ahead to repay your loan. According to general guidelines followed by most banks, salaried employees must be between 21 to 60 years of age while applying for a personal loan. For self-employed individuals, this limit is 25 to 65 years.
• Income
Your personal loan eligibility depends on your regular income. The higher your income, the higher the loan amount that you can borrow. It is because banks will perceive you as someone with strong repayment ability.
• Geographical Location
Your residential area plays a crucial role in determining whether you will qualify for a personal loan or not. Those who stay in metropolitan cities have a better chance of getting a personal loan than those who stay in rural or semi-urban areas.
• Credit History
Credit history has the most significant impact on your loan eligibility. The interest rate, tenure, and loan amount you can borrow depends on this factor. It is advisable to have a credit score of over 750 to improve your chances of getting a personal loan. A good credit score means you have an excellent financial history. It also means you pay the EMIs of previous loans if any on time.
• Company
The company for which you work will also affect your personal loan application. Working for a popular company that has a good reputation makes you come across as someone with a stable job, thereby making you a safe bet for the lender. Some banks also check if you are salaried and employed for more than two years in the current profession or self-employment minimum of five years of total tenure of earnings. Your employment stability is directly related to your loan repayment capacity.
• Housing
Your housing situation also plays an integral part in determining your loan eligibility. If you reside in your own house, you will have a better chance of having your application approved. The reason for this is that living in a rental house lowers your disposable income, thereby reducing your repayable capacity.
Personal loan eligibility depends on many factors, and the final decision of lending or rejected depends on the lender after they have verified all the details of the applicant. Also, a personal loan calculator helps you determine your monthly installments to make your financial planning easier.
Reputable banks such as Axis Bank, provide a personal loan calculator, an easy-to-access automatic online tool to ascertain your EMI. Remember to balance the tenure and interest rate of the loan you want to suit your needs. Make sure to check your personal loan eligibility before applying for it as a rejection of your application can increase your problems, especially when your requirement is urgent.
Every lender will look for certain factors like age, income, debt to income ratio, credit rating, employer and job stability. Make sure you satisfy each criterion that the chosen lender considers as a creditworthy borrower and get the loan you seek.
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