Personal loans have become a great help in disguise for many individuals who are trying hard to meet unexpected expenses, provide additional financial support to their family, or balance their bills. From paying for medical bills to covering your wedding costs or financing a dream vacation, a personal loan is an ideal way to get access to money without any collateral requirements. But, before applying, there is one significant thing you should know, and that is nothing but personal loan eligibility.
Being attentive to the qualifying factors in advance helps boost the process and may also increase your chances of being approved. Just check this post to find out all you wanted to understand about personal loan eligibility before you apply with confidence.
Reasons Knowing the Eligibility Criteria for a Personal Loan is Important
Understanding personal loan eligibility will help you identify your financial status and what to anticipate from the lending amount. It guides you to the right amount and makes you ready for the essential documents to approach the already qualified lender with ease and confidence. More importantly, you decrease rather than increase your odds of getting rejected and increase the chance of having access to a quick credit when you need it the most.
Creditors look at different benchmarks when you apply for a personal loan. They use these benchmarks to identify whether you would make a trustworthy borrower. When you have the personal loan eligibility, approval is effortless, and the terms, for example, interest rates, are in your favor. In addition, if you don’t qualify, your application could be denied, which could impact your credit score.
Which Parameters Affect Personal Loan Eligibility?
Eligibility criteria generally differ from lender to lender; however, the following are common ones:
1. Applicant’s Age
Lenders usually limit the age range of borrowers to be eligible. Usually, the youngest age is 21, and the oldest is between 55 and 65 at the maturity of the loan, which differs between the lenders. Fulfillment of this age criterion is one of the primary factors in identifying personal loan eligibility.
2. Income Level
How much you are paid back is a key factor in your repayment capacity. Lenders will typically require a minimum monthly income, which can vary depending on the average cost of living in your city and the lender’s specific requirements. For example, the inception for individuals in metro cities might be more than for those in smaller towns. The higher income will not only improve personal loan eligibility, but it will also provide access to larger personal Loan amounts.
3. Employment Condition
Your employment condition may well increase your credit rating if you are working in a trusted company or if you have a steady history of self-employment. Workers who are employed in a Government undertaking or a well-known organisation may find it effortless to fulfill personal loan eligibility requirements. For individuals who are self-employed, lenders may want to assess the stability, turnover, and continuity of the business.
4. Credit Score
It all depends on your credit score. For example, a score of below 750 will only make you qualified for loans with increased interest rates. It shows your history of repayment, credit usage, and financial preparation. A higher credit score can generally end in faster approval and more favourable loan terms.
5. Existing Debt Liabilities
Lenders also consider your debt-to-income ratio. Your personal loan eligibility can suffer if a massive part of your earnings is already being employed to pay off loans or credit card bills and liabilities. Having a reasonable amount of debt increases your odds of approval.
6. Requested Loan Amount
And the upper limit that you apply for should be commensurate with your income and your ability to repay. In other words, if borrowers apply for a 1 lakh loan, lenders will check if their income and past credit behaviour can match up to the required amount. This will make it easier to apply for a standard loan amount, satisfying the eligibility requirements.
Tips to Improve Your Personal Loan Eligibility
If you are worried that you do not fulfill certain criteria, have no fear. Here are some essential tips you can follow to increase your eligibility:
1. Keep a Good Credit Score
Ensure you do not miss credit card and EMI payments to be done on time, and keep a credit score of more than 700.
2. Lessen Existing Debt
Lower your debt-to-income ratio by paying off smaller loans or carrying a balance on credit cards.
3. Select a Reasonable Loan Amount
Request an amount that can be seen as a regular payment to you. If you are considering a 1 lakh loan, your salary and repayment history will need to justify it.
4. Choose a Longer Tenure
The greater the tenure, the lower the EMI, and the higher the personal loan eligibility.
5. Show Income Proof
Side income sources, such as rental or investment income, can also assist you in building wealth because these incomes can be added to your complete financial picture.
6. Apply with a Trustworthy Lender
Choose lenders with lenient qualification requirements. To do so will help your approval odds, especially if you are on the verge of meeting some requirements.
Final Words
If you are thinking about getting some financial help, that could be in the form of a personal loan, but the biggest part about getting approved for it deals with the right qualifications. Age, income, employment stability, credit score, and repayment history are the variables that determine whether one is eligible for a personal loan or not. You need to know these so you can get things right and properly structure your profile and increase your chances of getting approved.
If it is something you are thinking about applying for, do the math to find out if you are eligible, and remember to only borrow what you can afford to repay. Be it as low as a 1 lakh loan or higher, the well-planned method is what leads one to success.
If you are someone who is looking for a genuine and reliable lender, then you should opt for Stashfin, which offers multiple personal loans for different purposes. Stashfin is a hassle-free way to access excellent personal loan products with minimum documents, with complete online access and a real-time tracking feature.
Disclaimer: This article contains sponsored marketing content. It is intended for promotional purposes and should not be considered as an endorsement or recommendation by our website. Readers are encouraged to conduct their own research and exercise their own judgment before making any decisions based on the information provided in this article.
