Nothing can be more stressful than your personal loan application getting rejected when you are in an immediate need of funds. Without a second thought, you would again apply for the other loan, without realizing this could affect your credit score significantly, which would clearly reduce the future prospects for your loan clearance.
Note that personal loans are unsecured loans; hence, they do not require you to mortgage your valuable assets.
Some platforms provide loans online to you as well. Also, many organizations, like banks and other financial institutions, are ready to offer you personal loans seeing your recurring income. The eligibility for loan approval varies from one bank to another though there are few common criteria that almost every bank in India follows while considering you as a borrower which include individuals’ age, profession, annual income, credit history, and outstanding liabilities at the time of applying for a personal loan.
Know which criteria you should stand on to be eligible for a personal loan:
It means that a financial institution will only lend money to people who can prove their identity, earning capacity, and residential status.
Age Criteria: The general criteria to avail a personal loan is that you must be a salaried individual aged between 21 to 60 years. On the other hand, a self-employed individual must be within 25 to 65 years of age.
Income: Your annual income is an essential consideration for personal loan eligibility. Your monthly income forms the basis on which your loan amount would be determined.The loan amount will be decided based on your monthly income. The higher the annual income, the more are the chances of you getting a higher sanction of loan.
Stability Check: Your stability is determined by your annual income or whether you are a salaried person or not. It is crucial for a salaried person to have a minimum of 2 years of professional experience and should have spent at least 1 year in their current profession.
While for a self-employed person, he or she must have a minimum of 5 years of total experience and at least 2 years of experience in their ongoing business. Although this varies from one bank to another and is quite flexible, summing it all the banks may not provide loans easily to a fresher.
Employer: The better company you are working at, the more are your chances to get the loan easily and conveniently since it determines your repayment capacity.
The Financial History
Financial stability: Your annual income over the years determine how financially stable you are. You need to have a recurring income that would ensure your creditworthiness and if you would be able to repay the personal loan in time.
Credit score: A good credit score forms an essential criterion for estimating the creditworthiness of the borrower. It is to evaluate how much good you have been with your installment repayments and would determine your financial position.
Outstanding liabilities: In case you were not punctual with your EMI repayments, you might have to face rejection on your personal loan application. It can be a negative factor showing your inability to repay and outstanding liabilities, making it more difficult for you to get clearance.
Also Read: How Can You Save Money With Personal Loan?
How to know if you qualify for a personal loan?
To know if you stand the chance of getting clearance on your personal loan, you can easily evaluate your personal loan eligibility and also calculate EMI using utility tools like personal loan eligibility calculator & personal loan EMI calculator available online. The calculator estimates your loan amount, EMI that you need to pay every month including the interest you would be paying on the loan you opt for.