Factors Affecting your Eligibility for a Personal Loan

Do you know before securing a personal loan, you need to get eligible for it? Lenders have their own eligibility requirements which you need to fulfil. Personal loan eligibility is the first step that you must take to avail personal loan. Whether it's about buying a new appliance, renovating your house, or covering the medical emergency expenses, a Personal Loan is an excellent way to manage emergency and non-emergency expenses.

Are you planning to get quick personal loan approval then you must keep the eligibility factors in mind. 

Factors Affecting Personal Loan Eligibility:

There are various factors that affect the eligibility for personal loan, below are some of them discussed:

Income:

Lenders consider the monthly income of the borrower as it gives the security to the lender that the borrower has an adequate monthly income to repay the loan amount on time without any delay. By location also the income requirement varies. The income requirement is comparatively higher in metro cities such as Mumbai, Delhi, and Bengaluru as in these cities the cost of living is high. Generally, salaried individuals are considered to have a good profile as they have monthly income with a regular source of income and can get easy access to personal loans.

Employment: 

Self-employed and salaried individuals both are eligible for securing a personal loan. Self-employed individuals have a steady source of income and profitable business. For eligibility, you have to submit income tax returns, a recent three-month salary slip, bank statement to verify the income and employment.

Credit Score:

Credit score plays a vital role in providing you with a personal loan. Generally in India, the lender relies on the CIBIL score to check the creditworthiness of the borrower. Credit score ranges from 300-900 and a credit score above 750 is considered to be a good credit score. If in case your credit score is below 700 then firstly try to improve your credit score to secure a personal loan easily and fulfil the eligibility criteria required by the lender. The higher the credit score the more the chances of getting quick personal loan approval. When you apply for a personal loan online you can also check your credit score for free on the lender's website.

Loan Amount:

According to the need, borrowers decide their loan amount, but loan amount depends on various factors. You can get a higher loan amount only when you have a good credit score with high income. A high loan amount must be taken only after looking at your financial need, when you genuinely need a high amount of money then only apply for a personal loan. Otherwise, if you can manage your expenses with your savings then do not apply for a higher loan amount.

Tenure:

Normally the tenure period ranges from one year to six years depending on the lender. Lenders provide longer tenure to the borrower who has stable employment with a steady income. Longer tenure means higher interest rates. Choose your tenure according to your loan amount, you can also check your EMIs, interest rate, and tenure in the EMI calculator.

Age:

Age is one of the important factors in determining your loan eligibility for a personal loan. Lenders prefer borrowers between the age group of 21 to 60, as they check the working period of the borrower. In this period a borrower can pay off the loan amount on time as they have an income source. 

Work Experience: 

Personal loan applications also consider the total work experience a borrower has, since how long you've been working in a stable company or have your business with continuous cash flow. Salaried individuals must have work experience of a minimum of two years in their current job, while on the other hand, self-employed individuals need to have their business for at least 4-5 years.

Relation with Lender or Bank:

Relationship with a lender or a bank matters a lot in the eligibility criteria of a personal loan. You can easily be eligible for a personal loan if you have a healthy financial relationship with the banks. You are paying the existing loan EMIs on time, maintaining your cibil score, and also keeping an eye to balance your bank balance. This may build a good relationship with the lender or bank.

Debt-to-income Ratio:

Debt-to-income ratio is the ratio of your monthly debt payment to your monthly income. You can easily get eligible for a personal loan if you have a low debt-to-income ratio. Lenders generally consider a 40% - 50% ratio a viable one. So maintain your DTI to get eligible for personal loans without any obstacles. 

Existing Debt:

Existing debt is another factor that is considered by the lender to avail personal loan easily.

A personal loan eligibility check is important before applying for a loan as this will help you know your eligibility for a personal loan and will save you time if there are any hurdles after applying.  So do consider the factors and then apply for a personal loan online.

Conclusion:

In conclusion, there are many factors that decide your personal loan eligibility including age, credit score, income & employment, tenure & loan amount, and other factors.

So it is a wise step if you check the eligibility of a personal loan before applying for the personal loan.

You can check your credit score, EMI, tenure period, and total amount to be paid with interest before you apply to check your eligibility for a personal loan online.

Apply personal loan online, see the complete process thoroughly, and get quick personal loan approval through My Mudra. We care about your personal needs, so here we assist you in getting a personal loan online. If you wanna know more about personal loans and other loans, keep reading the articles and I will bring more informative blogs to help you make a decision in securing a personal loan or any other loan through online platforms.