Being a salaried individual, you may opt for a personal loan anytime provided you meet the eligibility parameter. Nowadays, many lenders tend to assess your personal loan eligibility from before based on your credit history to provide you with a pre-approved loan offer, which is a type of instant personal loan. To avail an instant personal loan, you do not require providing any documents and the loan is approved within the same day of placing the loan application.
However, if you do not have an instant personal loan offer, you can apply for a regular personal loan to meet your monetary mismatches. However, before you apply for a personal loan, ensure to understand the personal loan eligibility criteria set by the lenders.
Crucial parameters that lenders consider to decide your personal loan eligibility –
- Your age and location
Your age is one of the crucial parameters as it gives the lenders an insight into your repayment potential. To qualify for a personal loan, you must fall between the age bracket of 21 and 60 years. Note that the closer you are to your retirement age, the lower is your chances of qualifying for a personal loan at higher tenure because of your reducing earning years. The next essential personal loan eligibility parameter is your location. Lenders generally hold differing income requirements depending on the city you reside in.
- Your income and stability
Your income shows your potential to repay the personal loan on time. As stated previously, lenders fix an income criterion depending on the city you live. Usually, for most lenders, the minimum monthly income required to avail a personal loan is Rs 25,000. Besides your income, lenders even factor in your occupation, organization, and job tenure. Combined, these parameters decide your job and income stability for personal loan approval.
- Fixed monthly obligations
Besides your monthly salary, lenders even consider your monthly expense to figure out your disposable income. It is because your disposable income allows the lenders to understand your potential to repay the personal loan EMI. Lenders might turn down your application or approve it at a higher personal loan interest rate if your debt-to-income ratio is over 60 per cent. This is because a higher debt-to-income ratio indicates your higher potential to default on personal loan EMI, which makes the lenders view you as an individual with a high credit risk.
- Your credit score and history
Your credit score and history are linked with each other. If you hold a poor repayment record, you cannot hold a good credit score. Both decide your credibility, which is crucial for all personal loan lenders. Usually, lenders of personal loans insist you have a higher credit score of 750 and above to be eligible for a personal loan. Note that, if you have a poor score and history, your application may either be rejected or approved at terms and conditions not suitable for you.
Ensure that for a hassle-free experience, you must keep the above parameters in mind before you apply for a personal loan. Also, you must make sure to use an online personal loan EMI calculator to determine a suitable EMI and tenure as per your repayment potential and cash inflow.