Worried About Eligibility? Here’s a Checklist For You To Know Your Personal Loan Eligibility With Ease!
Personal loans are unsecured loans that borrowers can apply for when they need funds. This loan is advantageous given its flexibility with the end-usage of the loan amount. Unlike a home loan or education loan, a personal loan does not restrict you to spending the money only on specific expenses. Now, before applying for a personal loan, it is necessary first to be aware of the personal loan eligibility criteria that financial institutions have set.
These criteria will differ based on whether you are a salaried professional or a self-employed individual. Take a look at a checklist to understand lenders’ loan eligibility criteria:
Personal loan eligibility criteria for salaried individuals
- Applicants must be between the age brackets of 21-60 years.
- They must hold a graduation degree.
- They should be working for a private/public limited organization or an MNC.
- They should have a monthly income of at least Rs 25,000. (For non-corporate employees, the minimum monthly payment is set at Rs 30,000)
- Should have at least 1 year of work experience
Personal loan eligibility criteria for self-employed individuals
- Applicants should be at least 21 years of age.
- I should have a decent credit score.
- Should be running a business for at least 2 years.
- Should have a minimum monthly income of Rs 25,000.
- Should be an existing account holder with the bank for at least a year before applying for the loan.
Therefore, this is a general checklist of the eligibility criteria set by lenders. You should also be aware of a few practical ways in which one can improve their loan eligibility. Take a look:
1. Avoid taking multiple loans at the same time
If you are already paying off a couple of existing loans simultaneously, taking on another personal loan further reduces your repayment capacity. This is a negative sign for a lender, so it is advisable to clear any existing loans before applying for a personal loan.
2. Declare any additional sources of income
An applicant’s monthly income is evaluated by lenders to understand whether they would clear the loan. If you have any additional sources of income, such as a freelancing contract, declare this to the lender as it can improve your eligibility.
3. Keep an eye on the debt-to-income ratio
Before approving a personal loan application, the lender needs to ensure that the borrower can repay the loan. This becomes difficult when the borrower is already in debt. This is why you should clear any outstanding bills and make sure that the loan’s EMIs are not more than 40% of your monthly income.
Remember that not all lenders have the same personal loan eligibility criteria. Financial institutions can have different terms and conditions, which is why it is essential to check with your lender about their specific eligibility criteria before applying for a loan.