Personal loans can be instrumental in addressing your financial goals as well as urgent needs as they offer quick financing. Since they do not have any restrictions on the end use of the loan amount, you can use the funds to cover all your requirements with no hindrance. Furthermore, you need not pledge an asset to avail the loan, which also minimizes the documents required to apply for personal loan as well as its disbursal time. While you can get a personal loan with ease, remember that as the lenders do not have any security to fall back on in case you default on repayment, they usually have stringent personal loan eligibility criteria that you need to meet.
Take a look at the eligibility criteria that affect personal loans, and how you can improve your chances of getting your application approved.
Age is one of the most important factors affecting your personal loan eligibility. Your current age determines the number of years you are left with as a working individual and thus, affects your income, which in turn affects your repayment ability. This is why lenders check your age before approving your loan.
If you have applied for a loan close to retirement age, then lenders are sceptical in offering you a loan. In contrast, applying for a loan at a young age, where you have ample working years of your career ahead of you enables you to get a quick sanction. For the same reason, the minimum and maximum age bracket differs depending on whether you are a salaried or self-employed individual.
Your income directly determines your repayment capacity for a loan and thus your personal loan eligibility. When you have a substantial salary in hand, lenders will offer a quick personal loan since you are less likely to struggle with your finances and pose less of a risk when it comes to default. The minimum monthly salary requirement set by the lenders usually differs from one state to another due to the difference in cost of living. For instance, the minimum salary required by the lender may be Rs.25,000 if you are residing in Goa and Rs.36,000 if you live in Delhi. Furthermore, having a high income also makes you eligible for a larger loan amount.
Your work stability
This aspect decides whether you are financially stable so as to repay the loan with ease. So, if you tend to jump from one job to another often or have a unstable earning pattern, then your loan application may be denied. Similarly, the organisation you work with also has a significant impact on your personal loan eligibility. Being employed by a reputed private company, MNC or public organisation indicates job stability and suggests that you are a reliable borrower. You are also viewed as a safe bet by lenders if you are a self-employed applicant with a stable business income.
Your credit score
As your credit score reflects your creditworthiness, having an excellent CIBIL score, ideally above 750, increases your personal loan eligibility. Your score is calculated by analysing your repayment history, your existing dues, and types of debts you have borrowed in the past. Therefore, lenders may refuse to offer you a loan if you have a poor credit score since this does not attest to your financial credibility. While some lenders offer personal loan for salaried even with low credit scores, they come with hefty personal loan interest rates.
Your debt-to-income ratio
DTI is the ratio of your existing debts against your gross income. Lenders measure DTI before approving your loan application to check if you can afford the EMIs. If more than 40% of your income goes towards repaying debts, be it in the form of loan EMIs or credit card dues, then you come across as someone who is struggling with your finances. This may also lead to delays in EMI payment and decrease your ability to repay the loan. Similarly, having a credit utilization ratio above 30% portrays you as a credit-hungry individual and lowers your personal loan eligibility. So, avoid using more than 30% of your credit limit and opt for a lower loan amount to make a successful application.
The best way to access finances easily is to choose a lender, with simple personal loan eligibility criteria, such as Bajaj Finserv. The NBFC has easy-to-meet eligibility terms that makes it easier for you to qualify for the loan. You can apply for a personal loan from Bajaj Finserv if you are a resident citizen of Indian, aged between 23 and 55 years. You should also be a salaried applicant working in either an MNC, public, or private company and have a credit score of at least 750. If you meet these terms, then you can qualify for a loan amount of up to Rs.25 lakh with a flexible tenor extending up to 5 years. You can also choose the Flexi Loan facility that enables you to withdraw funds from your total sanction multiple times, as the needs arise, with no fresh applications. Here, interest is charged only on the withdrawn amount instead of the entire loan amount. This makes it affordable for you and allows you to meet unexpected expenses with ease.
After checking your personal loan eligibility, make sure to check your pre-approved offer from Bajaj Finserv for instant financing via a customized personal loan deal!