A personal loan is perhaps, the most suitable financial tool that you can use to meet your urgent financial needs. It is simple, quick and easy to avail a loan through a personal loan app. However, because a cash loan is an unsecured form of loan, which means you do not have to submit any assets to get the loan. There are a few set criteria that you must meet for the lender to approve your loan application. Though the eligibility rules differ from lender to lender, the basic criteria remain the same.
Read on to learn about the typical requirements you’ll need to fulfil and the supporting papers you’ll need to present before you start looking for a loan. This information may increase your chances of being accepted and make the application process go more smoothly.
Factors That Are Considered by Lenders While Determining Applicant’s Personal Loan Eligibility
The following are five typical criteria that lending organisations use when examining loan applications.
1. Your Credit Score
Personal loans are unsecured loans, meaning that there is no collateral used to secure them. Lenders approve these loans solely based on your credit score. Your credit score is a reflection of your repayment history and debt management skills. A good credit score boosts your chances of getting a personal loan, while a poor credit score might lead to the denial of your application. You can also qualify for better terms on your loan if you have a good credit score.
To qualify for a personal loan from a reputed lender, you should try to improve your credit score. There are many proven ways to do so. You can try and close some of your existing loan accounts, or consolidate your multiple loans or debts. Also, maintaining your credit card usability below 30 % of your card’s limit will help improve your credit score.
2. Your Monthly Income
Before approving the loan, your lender will check if you have a sufficient monthly income to handle the EMI regularly. Most lenders state that you must have a stable monthly income of at least ₹15,000 to be eligible to get a cash loan.
In addition to this, lenders also check the stability of your income to ensure that you will not miss your EMI payments, due to a delay in salary or payments. That’s why, lenders check that you are having a stable income source and that you are working with the same employer for more than six months. They also prefer people working in the government sector or those working in an MNC.
3. Your Age
Your age is another crucial factor that impacts your eligibility for a cash loan. This is because lenders judge your earning potential based on your age. The typical age range for getting an instant loan through a loan app is between 21 and 58, as people of this age group are capable of working.
The age of the applicant also impacts the interest rate as well as the loan amount eligibility. A younger applicant is considered to have more potential of employment and lesser chances of getting bogged by unforeseen circumstances like health issues. That’s why candidates of lower age group are often considered ideal by lenders.
4. Employment Qualification
The lender may also consider the status of your business and your job circumstances when assessing your loan application. If you have long-term employment with a renowned organisation, your chances of getting a personal loan from the lender are greatly boosted. When you switch between jobs too frequently, the lender will interpret this behaviour as a warning indication that you are not financially stable and can’t maintain your work. When opposed to those who switch jobs every year, lenders frequently prefer persons who have a stable income and have been employed by the same business for longer than two years.
5. Work Experience
Depending on the lender, your career, and other crucial factors, different levels of expertise may be required to measure your eligibility. People with more work experience are frequently perceived to have a more secure income stream than those who have recently begun their careers. The main goal of taking your work experience into account is to determine whether or not you are economically solvent. Long work experience will not only make you eligible for a personal loan but will also give you benefits like getting an instant loan at a cheap interest rate in addition to helping you qualify for one.
Personal Loan Eligibility Criteria
Some lenders may have a few extra eligibility criteria in their personal loan eligibility list, but most of the time these criteria are similar. Here is a list of eligibility criteria that you have to qualify for before getting the benefits of a personal loan.
- You must be a citizen of India.
- You must belong to the age bracket of 21 to 58.
- You must earn a minimum of ₹15,000 per month.
- Both salaried and self-employed individuals can apply for this loan.
Compared to other types of loans, personal loans are quite easy to obtain. All you have to do is check your eligibility, fill up the application form, submit the documents and wait for approval. Once your cash loan application is approved, the funds will be disbursed into your bank account instantly.
Though anyone can apply for a personal loan, the chances of your loan application being rejected is quite rare, but it does happen to people sometimes. The reason is your loan eligibility. So before you apply for a personal loan, we advise you to go through the personal loan eligibility.