In today’s time loan is a common matter for human beings. Personal loan is an easy to avail financing option without any collateral. In today’s time quick personal loan can be availed through instant personal loan with minimum requirement of documents. Anyone can take this loan if they have the capacity.
The eligibility criteria of lenders for personal loans for salaried employees may be different for business individuals or professionals. Some banks want legal documents of the property and some banks just verified holder personality. Let us look at the standard eligibility criteria for personal loan:
What is the basic criteria for personal loan?
There are certain eligibility requirements you need to meet in order to apply for a personal loan. Let’s go over what they are so that you can see whether you qualify or not and keep reading to learn more!
Whenever you go for a personal loan, there is a minimum and maximum age that you have to fulfill. Most of the banks and NBFCs today offer personal loans to applicants in the age group of 18 years to 65 years. However, the age criteria are slightly different for salaried individuals and self-employed individuals. The age limit is 18 – 60 years for salaried and 21 – 65 years for self-employed.
Your geographical area also matters a lot for personal loan. The area where you live plays an important role in determining your eligibility for a personal loan. If you live in a remote area, the personal loan amounts are lesser as compared to someone living in a developed area or metro city.
Whenever you approach a bank or NBFC for a personal loan, you also have to fulfill the criteria of your income. Lenders will check your net monthly income to ensure that you have the ability to repay the loan. Net minimum monthly for an individual should be more than Rs.5000. The higher your income, the higher the loan amount you are eligible for.
Ownership of property
If you need a personal loan but you do not have any job or business, then it is very important to have a property with you. When you go for the loan, you have to present your property (whether residential or commercial) to the bank or NBFC as collateral. It is a popular type of loan as it is cheaper than a personal loan and offers a larger loan amount over a longer repayment period.
Personal loans are unsecured loans that can be availed without pledging any collateral. All you need for this is a good credit score. A high credit score indicates to lenders that you are a low-risk borrower. Conversely, a low credit score indicates that you are a high-risk borrower, which lowers your chances of getting approved for a loan.
Type of Employment
Even if you have a good credit score, your employer remains an important factor in determining your eligibility for a personal loan. Along with a borrower’s income, job security is of utmost importance to all lenders. This is why lenders often differentiate employers based on various demarcating factors.
For example, if a borrower has just joined a company, he may find it difficult to get approved for a personal loan. Similarly, if a borrower is working with a start-up, he has a relatively higher chance of losing his job due to failure of the start-up.
Credit score matters but your history is what banks usually look at. You can have a new credit with a 750 score and still be denied. Credit history is data from past years which helps lenders/banks to assess whether you will repay the amount borrowed/loaned or not.
A longer history shows that you have more experience using credit. The longer your credit history, the more accurate the lenders will be in determining your risk appetite while lending to you.
In today’s times, having a good credit score alone is not enough, banks also assess your repayment capacity, in other words, they need to ensure that you are financially capable of paying your loan EMIs promptly are or not.
The debt-to-income ratio is the ratio of your monthly gross income to all of your monthly debt expenses. In other words, it is the percentage of your monthly income that goes towards paying off your loan. Now that you know what the debt-to-income ratio is and why it’s important, you can work on keeping this number within an optimal range.
How Can I Check Personal Loan Eligibility?
Whenever you apply for a personal loan, the first thing you need to do is determine your eligibility. For this you can use any bank or NBFC eligibility calculator to know how to check personal loan eligibility.
- First open the loan eligibility calculator.
- Then enter your date of birth, your address, and your monthly expenses.
- Once you fill in your details, you will see your loan amount.
- Now you can apply for the same mount and get instant loan approval online.
When you’re comparing personal loans, be sure to pay attention to:
Once you meet the basic requirements for a personal loan, you may be able to qualify for a personal loan from various lenders. The best way to find out is to shop around and compare offers from multiple lenders. When you are comparing personal loans, be sure to consider the following:
Annual Percentage Rates (APR) :- This is the cost of borrowing money, and it includes the interest rate plus any additional fees.
Loan terms :- These are the terms of your loan, including how much you’re borrowing, how long you have to repay the loan, and any fees or penalties associated with late or missed payments.
Repayment options :- Some lenders allow you to make automatic monthly payments from your savings account, while others require you to send online payments each month. Make sure you understand the repayment process before signing for the loan.
What are main documents needed for a personal loan?
Getting your documentation right is essential for faster loan processing and approval. To apply for a personal loan the borrower needs to submit the following documents:
- PAN Card
- Identity proof
- Signature Proof
- Address proof
For salaried individuals:
- Salary slips for the last three months
- ITR or form 16
For self-employed individuals:
- Income computation, profit and loss account, and balance sheet for the last two years
- ITR for the last two years
- Business proof like License, registration certificate, GST number
- IT Assessment or Clearance Certificate
- Income Tax Challans, TDS Certificate, or Form 26 AS
Applicants do not need to visit any bank branch or NBFC office to submit these documents. They can scan and upload documents through the bank or NBFC app and start their personal loan journey.
Frequently Asked Questions(FAQ’s)
Q1. What is minimum salary to get personal loan?
The minimum income requirement for availing any personal loan varies from lender to lender. Most personal lenders have a minimum salary criteria of ₹ 5,000 to ₹ 20,000, depending on the city you live in.
Q2. Is there a minimum credit score for personal loan eligibility?
Most lenders believe that a personal loan requires a credit score of at least 750 to get the loan application approved. This shows that you have prior experience with responsible credit management and that you will make your payments on time.
Q3. I just joined my job how can I get personal loan?
Totally not likely. Generally, lenders look at the records of the last 6 months. If this is your first job, they won’t accept it. But if you’ve changed jobs and were employed for at least the last 6 months, they’ll probably consider you meet their eligibility criteria.
The Bottom Line
Life can be surprising sometimes. You never know when you may need extra funds to meet your financial needs. You can apply for personal loan in times of need as it helps you to get funds during financial crisis. There are specific personal loan eligibility criteria that you need to pass in order to get loan approval.
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