A personal loan is a great option for you if you want the funds to be disbursed instantly. A personal loan can simply be used for any reason including weddings, exigencies, and home renovation. Also, personal loans have a lower rate of interest than credit cards. Note that when compared to secured loan options, the interest rate of a personal loan is higher owing to its unsecured nature.
However, note that not everyone can avail of a personal loan. There is a specific eligibility parameter which must be met before the reputed lender considers forwarding the loan. Generally, you can review your personal loan eligibility by going through your lender’s site. Lenders have distinct loan criteria for distinct loan types. You can also visit its personal loan webpage to simply check your personal loan eligibility. You may even consider checking your personal loan eligibility parameter using the personal loan calculator in case this is available on the website of the lender. Lenders like Moneytap loan or Kreditbee loan generally have a personal loan calculator on their website. Lenders have distinct parameters for distinct loan types. You can approach their personal loan page to see their eligibility parameter. Also, you can use the personal loan calculator from the other lender’s website if it’s not available on the site of the lender you have zeroed on. Note that the personal loan sanction limit will be based on your eligibility.
Here in this blog, discussed is an indicative list of various aspects of personal loan eligibility, parameters that impact your eligibility and how to ameliorate your eligibility.
Indicative personal loan eligibility parameter
Often many lenders hold similar parameters to determine whether you are eligible for a personal loan. Such parameters can vary slightly but will generally be the same throughout the board. Curated here is list of top parameters for you to check your eligibility chances –
∙ Age – Must be at least 22 years at the time of placing the loan and maximum age of 58 by the time it matures.
∙ Citizenship – Applicants must be an Indian national to borrow from Indian lenders.
∙ Employment – Borrower must work with public or private sector companies.
∙ Work experience – At least one year of work experience and around 2 months should pass with your present employment.
∙ Monthly income – Applicants must hold a monthly income equating to at least Rs 20,000. Eligibility parameters for a personal loan are generally kept at a relaxed level so that the lenders may target as many applicants as possible. However, ensure to still consider specific parameters to know about your chances of availing of a loan. The eligibility parameter might be distinct for self-employed and salaried individuals.
Parameters that are factored in for personal loan eligibility –
There are certain common parameters that loan experts consider while approving your application for a personal loan. This not just holds true for bank lenders but also digital lenders like Moneytap loan and Kreditbee loan.
Ideally, your credit score must be 750 and above. A credit score is computed by the credit bureaus like CIBIL, Experian, CRIF Highmark and Equifax. A credit score is computed by the credit bureaus, which helps the lenders to know how likely you may repay the loan. The higher the credit score, the more creditworthy the applicant is. There are various parameters on which the credit score is computed. It factors in your wealth, income, your credit history, the number of times you have delayed or missed your credit repayment and others. The higher your CIBIL score more is your chances of availing of a personal loan.
It might appear unlikely; however, your employer plays a major role in deciding whether you will get the personal loan. The employer’s reputation assists the loan expert to judge its safety, and how reliable the income source is. If the employer is extremely reputable, then you have a high chance of getting your personal loan at a lower rate of interest from specific lenders. In case you are a self-employed individual, then the loan expert will judge your operation size, its revenue, the time span for which it has been functioning and others.
Age is an extremely common criterion among all lenders. Just adults can avail of loans as minors are not permitted to enter into any contract. However, being an adult is not sufficient. Various lenders need you to be at least the age of 21 or 22 years. This age is the major requirement as it is believed that they would have adequate maturity to understand the loan gravity and their responsibility for making the repayments. Moreover, on the other hand of the spectrum, the borrower even must not be very old when the loan matures. It is owing to the reason that as individual ages, they might retire, and their income source might cease. Hence, their repayment potential is impacted directly by their age. With the assistance of a personal loan eligibility calculator, you can simply find out the correct age.
Include a co-applicant
Not every bank lender will permit you to include a co-applicant, but few lenders do. Co-applicant is the one who borrows with you. Co – applicants maybe your parent, spouse, your business partner, and others. Lenders also factor in your credit score and the repayment capacity of the co-applicant when processing your loan. Thus, applying for a personal loan with a co-applicant may enhance your chances of getting your loan approved.
Avoid constant job changes
If you are a salaried individual, then lenders may review your employment history. In case you have had any constant job switches, then it shows that you are unstable when it is to employment. Hence, if the borrower’s employment is not stable then their income source and potential to repay the loan are even unstable.
Enhancing your credit score
As stated before, having a score of 750 and above is good for a loan application. If your credit score is below 750 then it may be considerably tougher for you to get the loan. Hence, if this is the situation then ameliorating your score must be your target. Your credit score may be ameliorated in numerous ways like –
∙ Repaying all your loan EMIs by the due date.
∙ Repaying your loan dues and credit card bills on time each month.
∙ Maintaining your CUR (credit utilization ratio) of less than 30 percent.