Considering a personal loan? Are you aware of your eligibility for one? Your application for a personal loan will only be accepted if you meet the lender’s standards for eligibility. A personal loan is a great way to handle a variety of emergency and non-emergency needs, whether they relate to a family member’s medical emergency, a wedding, vacation, your child’s schooling, or something as easy as buying a new appliance or even a cell phone.
The eligibility standards of the lender must be met in order to qualify for a personal loan, just like they are for all other sorts of loans. There are a few standards that you must meet in order to be approved for the loan, even if the eligibility requirements may differ between lenders.
5 criteria affecting personal loan eligibility
While your monthly income is a crucial consideration for all loans. It is frequently backed by security or collateral for secured loans like a home loan, car loan, or gold loan, unlike a personal loan. The lender would want to confirm that you receive a sufficient monthly income to enable you to make timely loan repayments. Location affects the criteria for income as well. Due to the high cost of living in major cities. It is typically higher in metro areas like Mumbai, Delhi, and Bengaluru.
Based on your credit history, a credit score is a three-digit number. In other words, it enables the lender to see how responsible you have generally been with credit, such as loans and credit cards. For instance, the CIBIL score, which ranges between 300 and 900, is used by the majority of lenders in India. The likelihood of being approved for a personal loan increases with credit score.
Lenders often favor applicants with a CIBIL score of 700 or higher. Prior to applying for a loan if your CIBIL score is below 700, you should work to raise it in order to ensure that you are eligible for a personal loan from the lender.
Lenders use borrowers’ ages to determine how many years of employment you will have left. Lenders typically favor salaried applicants between the ages of 21 and 60.
The age range for self-employed professionals and non-professionals is 28 to 65 years old. People in this category can continue working over the typical retirement age of 55 to 58 years since they are self-employed. Consequently, the maximum age is 65.
Individuals with greater job experience are typically thought to have a more stable financial future than those who have recently started working. Depending on the lender you select, your line of work, and other variables, the required minimum experience may change.
Your present obligations are the final crucial component of the eligibility requirements for personal loans. The lender wants to know specifically about any loans you are currently owing. Such as home loans, student loans, and so on.
The lender would then want to ensure that you have enough income to repay both the new Personal Loan you intend to take and your current debts.
Try to thoroughly comprehend these conditions before submitting your loan application to improve your chances of being approved. Additionally, as a loan applicant, you can utilize these criteria to bargain with the bank about your loan terms. If your monthly income or credit score is high and you have few responsibilities. For example, you can request a favorable personal loan interest rates.