6 IMPORTANT FACTORS THAT DETERMINE YOUR PERSONAL LOAN ELIGIBILITY
Are you planning to apply for a personal loan online? But confused whether you’re eligible or not.
Well! With the growing needs of people in India, getting personal loans has become very easy and witnessing colossal demand. A personal loan can meet the emergency requirement as it is one of the fastest and easiest ways to get cash.
It helps arrange funds for holidays, medical emergencies, weddings, holidays, higher education, tuition fees, project renovations, events, and much more. Three things that make personal loans more alluring are that its widely accepted, unsecured, and have quick online processing.
Banks or the lenders from whom you wish to take a personal Loan have their eligibility requirements. Lenders may only grant you a personal loan if they find you are eligible.
A personal loan is a great way to manage a range of emergency and non-emergency expenses. But there are a few factors that you should consider before taking a personal loan. Like all the other types of loans, a personal loan also requires specific documentation and eligibility criteria. Different lenders have different eligibility criteria, but they do not vary much.
Here are six personal loan factors you must look for to get the best interest rates and fastest personal Loan. These six critical individual loan factors will determine and help you repay your EMI’s.
Here are six factors affecting your Loan eligibility:
1. YOUR MONTHLY INCOME
Monthly income is an essential factor that makes up your financial profile and is crucial in all kinds of loans. It is often directly linked to your ability to repay the Loan and is supported by security or collateral, especially in the case of a Car Loan, Home loan, or gold loan.
But when it comes to personal loans, the lender would require your monthly income details to ensure that you have an adequate monthly income. It would also be advisable to show additional income sources, including spouse’s salary, business income, or others if any.
Also, your monthly income requirements may vary depending on your location. For example, if you stay in metro cities like Mumbai, Delhi, and Bengaluru, the income requirements are higher as these cities’ cost is high.
2. YOUR CREDIT SCORE
A healthy credit score is highly crucial to all types of loans. A credit score is a three-digit number based which is generated based on your credit history. In other words, it lets the lender understand your repayment track record and how diligent you have been with managing debt in the past.
A healthy or higher credit score means that your chances of getting your Loan approved are more elevated. Lenders usually prefer a Personal Loan if you have a clean repayment track record devoid of repayment default.
To know about your credit score, CRIF Highmark, and other details, lenders seek information from specialized bureaus that deal with it. Getting a personal loan also depends upon multiple aspects like how frequently you paid your EMI’S if missed any EMI’S in the past if your EMI were paid in full or not, and what has been your payment track record.
Generally, a healthy credit score means a score of 700 and above. If your CIBIL score is below 700, you should first try to improve your credit score to be eligible for the Personal Loan.
3. YOUR AGE
Another important factor for personal loan eligibility is your age. Your age helps the lender get insights into your financial stability and earning ability. For example, in your early 20’s your financial stability may not be strong as it’s the start of your earning. Similarly, your age shouldn’t exceed 65 years of age by the time of loan maturity.
Lenders usually prefer salaried applicants between the age group of 23 and 58 years with specific work experience and financial stability.
4. YOUR WORK EXPERIENCE
Work experience determines if your income is steady or not. Applicants with a stable job have regularity in the flow of their income. Lenders usually prefer applicants with more work experience as compared to those who have recently started working.
Lenders also investigate the stream you are employed with to ensure that your employer is financially sound. An economically secure profile means you can probably get the lowest interest rate on a personal loan, and a long work experience can help reduce the speed. Also, the minimum work experience, type of occupation may differ for different lenders.
5. YOUR CURRENT LIABILITIES
Another crucial factor necessary for a Personal Loan is your current liabilities. The lender would like to seek all the details on your existing Loan, if any, like a home loan, education loan or car loan, etc. It is to ensure that you have adequate funds to repay all your existing liabilities and the new Personal Loan you are thinking of buying.
A shorter repayment method means you can get the personal loan approved at a low-interest rate. However, it’s important to note that your repayment tenure should not be overly ambitious, and your EMI amount is easily adjustable within your monthly budget.
It’s essential to understand all these factors before applying for the Loan, as it may increase your chances of availing of a loan at a low-interest rate. With these factors in mind, you can also negotiate your loan terms with the bank.