Here are the steps you can take to meet the eligibility criteria for a personal loan from banks or NBFCs.
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A personal loan is a preferred choice for people who need a lump sum of money without pledging a security or collateral. The main reason why personal loans are so popular is because of the flexibility they offer. Once you meet the personal loan eligibility criteria, the entire loan amount is credited to your bank account, and you are free to use it for fulfilling various expenses. Additionally, personal loans are disbursed quickly if you have all the documentation in order and a good credit score.
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Moreover, you can use an EMI calculator or an interest rate calculator to determine how much your monthly repayment liability will be. Using a personal loan calculator available on the websites of lenders such as Bajaj Finserv is a great way of planning ahead and ensuring that you don't miss any repayments. To get the lowest possible interest rate, you must first understand the factors that determine your candidature for a personal loan.
Personal loan eligibility
The eligibility criteria for personal loans vary slightly depending on the lender, but a few basic requirements are common to all.
- Age
The minimum and maximum ages of a candidate seeking a personal loan are between 21-67 years. The younger you are, the more years of earning you have ahead of you, and the better the chances of repaying the loan. Hence, younger individuals stand a better chance of getting a personal loan at a low interest rate.
- Income
Most lending institutions offer personal loans to individuals with a minimum monthly income of Rs. 22,000, depending on their location. Your monthly or annual income also determines the loan amount you will be sanctioned.
- Credit Score
Your credit or CIBIL Score is perhaps the most vital among all the personal loan eligibility criteria. Your CIBIL score reflects your repayment history. As you repay different types of loans such as credit card bills, home loans, and vehicle loans over the years, your credit score gradually builds up. If you have a credit score of above 750, lending institutions will likely offer you a high loan amount.
- Work Experience
The amount of your work experience indicates your professional stability and seriousness. Banks assess your work experience to get a better idea of your overall financial situation and whether you will be able to keep up with your repayments.
Tips to improve your personal loan eligibility
While most lending institutions are not very flexible when it comes to the eligibility criteria for a personal loan, there are still aspects that you can work on to boost your application:
- Build your credit score
A solid credit score is not built overnight. It takes months of timely repayments, no defaults or delays, and low utilisation of credit limit to elevate your CIBIL score. But the positive here is that this is entirely in your hands. If you decide to be punctual in all your repayments, you can take your credit score up to the golden mark of 750 within a year. This will allow you to get the best deals on personal loans from reputed institutions like Bajaj Finserv.
- Reduce other debts
Having multiple loans on your head is financial hara-kiri and a shortcut to defaulting. Banks and lending establishments, too, will be wary of disbursing another loan to someone already burdened by other repayments. It is prudent to close out your existing debts before applying for a fresh personal loan. Using a loan EMI calculator or a personal loan calculator from Bajaj Finserv can tell exactly how much of a financial burden an extra loan would be.
- Work on job stability
Banks perceive individuals serious about their profession as better personal loan candidates. Why? Because stability at work is central to a borrower's ability to repay a personal loan. If you have a work history that shows ample time spent across different reputable organisations, you can be assured of a good personal loan offer from the best lenders.
- Develop good financial habits
Building good financial habits takes time, but it goes a long way. Habits such as timely payment of existing loan EMIs and credit card bills inculcate financial discipline and give you a clearer picture of your financial situation. One way to develop sound financial behaviour is by regularly using a personal loan calculator or an interest rate calculator to keep abreast of your repayment capacity. Doing this will stand you in good stead when a lending institution assesses your financial situation and repayment record.
While personal loans offer great convenience in times of need, they also come with some pre-conditions, such as the rigorous personal loan eligibility criteria. Lenders put these in place to ensure that a loan is granted only to those individuals who can pay it back in full without delays or defaults. Once you apply for a personal loan, calculating your potential repayment obligation using a loan EMI calculator or a personal loan calculator is advisable to better plan the financial journey ahead.
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