A personal loan is one of individuals’ most preferred financing options to meet short-term credit crunches. Being a credit facility without the restriction of end-usage, they can also use the amount to meet any obligations. This is why the personal loan category has grown 2.3 times in value from Fiscal 2017 to Fiscal 2021. However, to leverage the credit facility, intending borrowers need to meet the personal loan eligibility parameters set by lenders. Otherwise, they may face difficulties in getting approval for their loan requests.
Aspects influencing personal loan eligibility
Here are five essential eligibility parameters for a personal loan:
- Monthly income
A personal loan is an unsecured credit facility in which borrowers do not collateralise their property as security. This is why they must assure lenders that they have a decent and stable monthly income to repay the debt conveniently.
Nevertheless, the minimum income requirements are generally higher for residents living in metro cities than applicants from small towns. Individuals can find the standard income they require for the loan from lenders’ websites. In this regard, they also need to know how much personal loan they can get on their salary.
- Age
Individuals can get a personal loan quickly if they have sufficient years of professional careers ahead.
Younger individuals generally get approval on their credit requests more easily than older applicants approaching retirement. After retirement, it may become financially challenging for borrowers to repay their debts. There is a high chance that the debt will turn into a bad loan. This is why most lenders ensure that their borrowers choose a tenor that can help them end their repayments before they become 67 years old.
- Credit score
Having a minimum CIBIL score of 750 is also essential to meet the personal loan eligibility standards. Such a credit score indicates that those applicants have repaid their previous debts on time. It gives lenders confidence that those individuals will not default on their loans. As a result, lending institutions approve those customers’ credit requests without much hesitation.
In this regard, individuals also may need to know how to get a personal loan with a poor credit score.
- Work Experience
Intending borrowers with sufficient work experience are more financially stable than individuals who have recently started careers in a specific field. This is because employees with sufficient experience are less likely to be dismissed from their job. In fact, they can also get employed in other organisations quickly.
Nevertheless, the minimum working experience required for the personal loan differs for employees and non-salaried individuals. Alongside this, borrowers should also know how to get a personal loan without a job.
- Present debt obligations
Financial institutions also check individuals’ debt-to-income (DTI) ratio while approving personal loans. This ratio indicates the percentage of monthly income applicants utilise for their debt repayment. Generally, a DTI ratio of around 21 to 35% is considered positive. Therefore, individuals who need immediate personal loans must ensure that they have a DTI ratio within the healthy limit. This can help them get approval on their credit requests quickly.
Besides understanding the influencing factors of personal loan eligibility, individuals need to know how they can easily apply for personal loans.
How to apply for a personal loan
Intending borrowers need to follow the below-mentioned steps to apply for a large or small personal loan:
Step 1: Visit the preferred lending institution’s website
Step 2: Get the personal loan application form
Step 3: Enter basic personal details and contact number
Step 4: Confirm the mobile number with the OTP
Step 5: Fill in the application form with KYC details and income data
Step 6: State the loan amount
Step 7: Submit the duly filled application form
Individuals will successfully finish their online loan application process after completing these easy steps. After this, the representatives from the lender will contact them to guide them about the procedures they must follow next to get the required credit amount.
Furthermore, some lenders assist their customers in meeting their credit shortages quickly with their pre-approved offers. These special deals are tailored for customers on financial products, like personal loans, business loans, and credit cards. By accepting these offers, they can significantly reduce their loan application process. They just need to mention their names and contact details to check their pre-approved offers.
In conclusion, meeting the personal loan eligibility standards is essential to get the credit facility conveniently. Borrowers need to know the factors that influence these eligibility criteria and focus on improving those. This way, they can evade chances of getting rejection from the lender’s end.