10 Factors that affect your personal loan eligibilityIf you are seeking financial support, applying for a personal loan is the correct move. But, how will you know whether you are eligible for a personal loan? First, you should meet the lender's terms and conditions to get your loan approved.
A personal loan is an unsecured loan without any collateral, and thus lenders exercise caution by setting eligibility criteria to prevent default in repayments and frauds. Therefore, the lender evaluates your creditworthiness whether you are capable of repaying the loan amount sans delay in personal loan repayment.
Listed below are 10 factors that affect your personal loan eligibility
You should fall under the age between 21 - 58 years. Your age helps the lender ensure that you have an adequate number of working years left. If your age does not match the eligibility criteria, your personal loan application may get affected, resulting in cancellation.
Your incomeA personal loan application should be made when your minimum income is eligible to repay the monthly personal loan EMIs. A lender analyses the income to confirm whether a borrower is capable of repaying the monthly EMIs on time.
Your repayment capacityLenders generally evaluate your monthly loan repayment history, including the EMI of your new loan, and existing EMIs of other debts should be within 50% of your net monthly income. Those surpassing this limit usually have less chance of getting a personal loan.
Your current obligationsIf you pay your existing loans like home loans, car loans, etc., the lender will ask for details. With these details, the lender will make sure about your creditworthiness to repay your financial obligations.
Your locationUsually, a personal loan can be applied from the place where you live. For example, if you live in Mumbai, you have to mention Mumbai, if the lender is registered in that city while applying for the personal loan. A personal loan cannot be applied from the city or state where you do not reside.
Your employment stabilityA personal loan is approved based on your stable job. A lender will check your years of work experience for salaried and self-employed individuals. As a result, if you have a steady job/business, the lender will instantly approve your loan.
Your credit scoreMost lenders calculate your credit score while giving a personal loan. Your score is analyzed and submitted by the Credit bureaus of India Limited (CIBIL). Your credit history is evaluated and checked before approving a personal loan. If you possess a good credit score, you are liable for a personal loan instantly.
Your debt-to-income ratioIf your debt-to-income ratio is on a higher side, the lender may cancel your loan application or may charge a high-interest rate on your loan. Suppose you get a high salary package, but most of your income is going into EMI payments. This factor will influence personal loan eligibility. Therefore, it is advisable to keep your debt-to-income ratio below 50 percent.
Inquiries for multiple loansIf you suddenly need financial help and go for a loan from the lender to lender. Lenders can see the number of inquiries made on your credit report. Each time you place a credit request for a personal, home, or car loan, a hard inquiry is placed on your account.
Existing relationship with the lenderMany people have a set financial lender, with whom they have been associated for years. Such lenders often suggest loans with negotiated interest rates.
Hence, stay well-informed about the loan eligibility criteria before applying for a loan. It eliminates the chances of loan cancellation.