A personal loan is one of the popular kinds of loans prevalent in the market. A personal loan is a financial instrument that comes in handy when there are any unplanned or planned expenditures like weddings, vacations or medical exigencies that go beyond your financial potential.
People need money for various reasons – especially with the pandemic bringing about a standstill in the economy and adversely impacting the lives of many; ready funds through financial institutions and digital lenders were the only thing that brought them back to normalcy.
This incident explains why in our nation, 77 per cent of the working population depend upon personal loans to make ends meet. Availing of a personal loan is looked upon as a good option if you can repay your loan EMI comfortably during the loan repayment period.
This said, to qualify for a personal loan, you must meet the personal loan eligibility criteria laid down by lenders. Here, discussed are how to enhance your personal loan eligibility chances to avail of loan from the best loan apps like RapidRupee, PaySense, Nira, CASHe, Money Tap etc.
What is meant by a personal loan?
Before going through personal loan eligibility criteria and the required benchmark that you must meet to avail of personal loan approval – you must understand why this loan, the so-called personal loan, has come to fame and become a highly preferred loan option.
One of the basic reasons why you must choose a personal loan is because they are unsecured loan options. Unlike a car loan or home loan, the applicant must provide collateral or security to the lender to get the loan. As there is zero collateral or security required, the documentation required to place the application for a personal loan is way lesser than any other loan type.
The next key reason why individuals choose personal loans is that once applicants get a personal loan approved, they can simply use the fund for the aim they deem fit or best. Lenders do not limit or restrict the end usage of funds secured through personal loans. From repaying long-standing car debts or home down payments and outstanding card dues to financing your home renovation or function – there are various expenses that can be financed by using a personal loan.
Lastly, the rate of interest on personal loans is fixed, meaning they do not vary like the finance charges of credit cards if you apply for a fixed-rate personal loan. However, in the case of floating rate personal loans, as they are linked to the RBI repo rate, the personal loan interest rate also varies with the change in the market.
The working Indian class shoulders a lot of responsibilities and, in many cases, find it difficult to survive on a monthly salary, which may be only adequate to meet their daily expenditures. Struggling to mitigate requirements owing to zero additional savings may make it tough for them to cope whenever any unexpected cost comes up. In such scenarios, when they are not able to secure a personal loan from a bank, they got no choice but to reach out to money lenders who may charge a higher rate of interest and impose unsuitable lending terms and conditions.
Personal loan eligibility explained –
When you require a specific amount, or you are short of funds, you may approach a financial entity to apply for a personal loan. At the same time, you can apply for a personal loan online easily. For the required loan amount to be disbursed – you require to mitigate a set of eligibility parameters.
Based on specific limits as well as general requirements, personal loan eligibility criteria differ from one bank lender to another bank lender.
Listed here are a few of the basic criteria that you must meet –
∙ You must be aged between 18 and 60 years
∙ You must be a citizen of India
∙ You must have work experience of 1 year at least
∙ You must be working with your prevailing employer for not less than six months
∙ You must be drawing an income of at least 15,000 INR or more
Additionally, to this, along with a duly filled up application form, you must even be able to effectively furnish your below-listed documents to lenders –
∙ Current passport-sized photo
∙ Income proof and salary slips
∙ Address proof such as Aadhar card, driver’s license, passport, voter ID etc.
∙ Identity proof like Aadhar card, PAN card, and government ID card for the ones employed with the Indian government
Keeping a thorough check on your score is also an imperative means to ensure that you are an eligible candidate for a personal loan.
How can you ameliorate your chances of availing of a personal loan?
Financial institutions and banks look for a range of crucial factors to decide your credibility. Here are some of the tips to enhance your chances of qualifying for a personal loan.
Check lender’s eligibility parameter –
Before you choose a lender, make sure you scan through all the needs. Doing so will assist you in avoiding any mishap or loan rejection due to various reasons like income, age, credit score etc.
Track your FOIR (fixed obligation to income ratio) –
When you end up utilizing a high per cent of your income to make the repayment of your existing debts, it, in turn, lowers your credibility for availing of a new loan. This can reduce your chances of availing yourself of approval for a loan, or at worse, lenders might also charge you a higher interest rate to cover the additional risk.
Always make sure that you can maintain a FOIR of at least 50 per cent. To enhance your chances, you may consider repaying your liabilities as well as credit card dues.
Apply for the correct loan amount –
To get approval on your loan application, you must apply for the correct amount that you are eligible for. Before you move ahead with your loan application, use the personal loan online eligibility calculator to know the amount you may be eligible for depending upon your income, your present liabilities, and other crucial factors.