Before opting for a personal loan knowing you are eligible or not is most important. Every lender has its eligibility conditions, and the borrower’s loan application is only approved when they find the eligibility criteria. For any expense like a medical emergency, planning for a wedding, vacation, or anything as simple as buying a new appliance or even a phone, A personal loan is a great option to manage any emergency and non-emergency expenses. Being unsecured in nature personal loans are lent without pledging any collateral. To prevent any default in repayments of loans and frauds, lenders set eligibility criteria with caution. Hence, the lenders evaluate your creditworthiness to examine whether you can repay the loan on time.
Here are the factors affecting Personal loans eligibility:
Your income is the most influential factor while determining eligibility. It is a globally believed fact that people with a regular flow of income have a higher repayment capacity than those with lower earnings. The creditor would make sure that you have sufficient monthly income. Not only will this increase your eligibility to acquire a loan, but it will also help you in negotiating for a lower rate of interest. Lenders require income also based on the borrower’s location, which is usually higher in metro cities like Delhi, Mumbai, and Bengaluru as living costs in these cities are higher.
Credit score plays a crucial role in the approval of loans. A credit score is a three-digit number, which ranges between 300 to 900. A score above 750 is considered a good score. It shows how you have been with credits like loans and credit cards in the past. The higher the credit score, the better the chances of your loan getting approved. If you have a score below 700, you should first work to improve your credit score.
Your age assists the creditors in assure that you have sufficient years remaining to work. The age group of 23 and 58 years salaried applicants are usually preferred by the lenders. Mainly people under this section are self-employed, they can work even after the usual retirement age of 55-58 years.
The more the working experience, the more financially secured the borrower looks to the lender. Creditors generally do not consider someone who has recently started working. The experience requirement may vary depending on the lender you choose.
The last and most important factor that affects your loan eligibility is your current liabilities. If you are already paying for loans like Home loans, education loans, etc. The lender will enquire about all of them in detail. By this, the lender would want to make sure that you can repay the existing debt along with the new personal loan you are planning to take.
Above mentioned factors are considered whenever you apply for a personal loan. It is advisable to check the criteria particular to your preferred lender in advance. After deciding on getting a personal loan, make sure you opt for a loan from a trusted financial partner.