Lenders across the country have numerous loan schemes keeping in mind not only your financial needs, but also your income and salary. The Personal Loan eligibility criteria vary from lender to lender, but knowing how much you are eligible for is the first step in getting a Personal Loan to fulfil your needs.
In other words, Personal Loan Eligibility Criteria give lenders a broad roadmap or guidelines to help them decide whether a Personal Loan applicant is eligible for a loan or not. This is incredibly essential as it helps provide a level of security to the lender and establishes trust, especially in the case of unsecured loans, which is what most Personal Loans being offered today are. Since these unsecured Personal Loans have no security or collateral attached in case a borrower is unable to repay it, the process of Personal Loan eligibility becomes even more important to lenders.
How Eligibility Helps Lenders and Financial Institutions
Personal Loans are given out on a large scale across India to a variety of applicants. While most may be repaid on time, it is possible that others may not. A loan that is not repaid in a timely manner or not repaid at all becomes a liability for lenders like banks and financial institutions. This is where Personal Loan eligibility criteria come into the picture.
Here are the ways in which eligibility criteria helps lenders:
1. Safety, trust and security: It is natural for any lender to be concerned about the repayment of a Personal Loan that has been approved or sanctioned. Having set eligibility criteria for borrowers, lenders select a customer who has the financial ability to repay the loan. This helps lower the uncertainty of lenders.
2. Ensures efficiency: It is likely that at any given point of time, there are thousands of applicants for a Personal Loan. This could include those who are capable of repayment and those who wish to borrow, but do not possess the financial resources to repay on time. In this case, eligibility criteria can help filter out the profiles of borrowers who do not fit the requirements, and ensure that those who need financial support get it without delay.
3. Establishes authenticity: The various KYC documents like salary slips, employment letters or IDs helps lenders ensure that the Personal Loan application is authentic, and the person applying for the loan is real. This is done to weed out all fake profiles or scams from the system to ensure that authentic borrowers can get their Personal Loan faster and easier.
4. Helps design loan schemes: Eligibility criteria also provides various details of borrowers to lenders. This information helps them design better loans to suit different income groups and profiles so that all they can cater to all who want to apply for a Personal Loan.
What Would Happen in the Absence of Eligibility Criteria?
1. Absence of eligibility criteria would make it immensely difficult for lenders to select and narrow down on applicants. It could lead to delays in sanctioning the loan and disbursing funds. This could prove detrimental to those applicants who need a Personal Loan quickly to meet their urgent expenses.
2. Without eligibility criteria, there would be no basis for the lender to decide who is eligible for the loan. This could lead to unfair rejections of applications and, as a result, reduce the overall transparency in the process of loan approvals.
What is the Eligibility Criteria for Getting Approval On Your Personal Loan Application?
The eligibility criteria for the approval of a Personal Loan application differs from lender to lender. However, most lenders consider the following features: monthly income, age, credit score, employer and business performance or balance sheets (if you are a self-employed individual).
These details not only help the lender decide whether to approve your loan application, but also the interest rate that you would be charged on the loan and the loan amount you would be eligible for. For example, if you have a salary of Rs.20,000 per month, you would be eligible to receive a loan of Rs.2,00,000. This calculation can be performed using a range of Personal Loan Eligibility Calculators Online.
Factors that Lenders Look for Before Approving Your Personal Loan
Your eligibility for a Personal Loan is determined via a range of factors. These factors help the lender make the final decision on whether to approve your loan application or not. Here are some common factors that lenders need to study before approving your application for a Personal Loan:
1. Income: This is the first and foremost factor that lenders will review in your application for a Personal Loan. Your income consists of the money you earn from your occupation and other sources like investments, rent, and more. Your income helps lenders decide two things: how much you can repay and what loan amount you would be eligible for. To review this, your lender may ask for financial documents like salary slips, bank statements and other details of your finances.
2. Employment status: This factor is in direct connection with your income. The employment status of applicants helps determine whether they have a steady income. Unemployed applicants for a Personal Loan may actually have high chances of having their loan requests declined as compared to applicants with a steady job. To fulfil this criteria, you may need to submit letters from your employer as an evidence of your employment. Getting your employment letter also helps the lender establish your authenticity and be rest assured that you receive income by reliable means.
3. Age: Age too is a major contributing factor that influences the final decision of the lender to approve your loan. This relates to your employment and income, and thus younger, employed applicants often get Personal Loans easily and quicker. This is because younger borrowers are seen to have more potential and means of increasing their prospects and income in the future. This potential and ability to earn ensures that they would be able to repay their loan EMIs regularly to clear the loan on time. Also, younger people are known to have fewer financial responsibilities, thus making it easier for them to repay a loan.
4. Credit score: There is a certain CIBIL score required for a Personal Loan. A CIBIL or credit score is the overall measure of a borrower's credit in terms of credit history, repayment history, etc. This score helps determine a borrower's creditworthiness. A good credit score is 750, and this is attractive to lenders as it implies that you have repaid your loans in the past on time, whereas a poor credit score (which is usually below 700 or 650) can hamper the chances of your loan getting approved. Your credit score also helps lenders determine the interest rate to be charged for your loan. Delay in paying credit card bill or owning too many credit cards can pose a risk to your credit score and increase the rate of your Personal Loan.
What is the Maximum Personal Loan Amount You Can Get if Your Salary is Rs.35,000?
Wondering how much Personal Loan can you get on your salary? You can easily estimate this using the Personal Loan eligibility calculator. All you have to do is fill in relevant data such as:
- Your date of birth
- Your city of residence
- Your employer's name or company's name
- Your monthly salary
- You also need to answer to whether you are currently repaying a loan or have home loan EMIs to pay.
Once you input the details, the Personal Loan Eligibility Calculator will give you maximum loan amount you are eligible for in seconds.
For example, if you have a salary of Rs.35,000 per month, you are eligible to receive a loan amount of up to Rs.3.5 lakh.
Check it for yourself and see what your Personal Loan amount is!
What are the Factors That Impact the Personal Loan Eligibility?
Not eligible for a loan? Don't worry. Your Personal Loan eligibility can be impacted by many factors, and there are several ways in which you can improve your eligibility and even lower your Personal Loan interest rates. Here are some ways you can do this:
1. Get a steady job: Since employment is a vital aspect that is considered when approving your Personal Loan request, and also affects the other factors like income, it is important for you to have a steady and well-paying job. With job markets expanding rapidly by the day, getting your dream job is no longer a difficult task. There are numerous industries that you can contribute to based on your education and skills. A job in a reputed organisation can help you create a good impression with the lender and even decrease your Personal Loan interest rate.
2. Work hard and get promoted: Instead of leaving one job and joining another in less than one year for a higher salary, work at an organisation you like and try to get a promotion. A promotion not only gets you a better salary and perks like a bonus and more, but also shows the lender that you are serious about working, thus boosting the chances of your loan application getting approved.
3. Increase your income with alternate means: Employment is one aspect of income, but you can also find alternate occupations to put your free time to good use and generate an additional income for yourself. You can also invest wisely and earn from FDs, mutual funds, etc. You can invest in gold bonds or even gain income via properties that are rented out. Alternate sources of income create a larger monthly income, and this would also improve your chances of getting a Personal Loan.
4. Ensure that you have a good credit score: A credit score is one of the primary factors that lenders take into consideration when approving a loan. This score indicates your credit worthiness and helps lenders determine whether you are financially able to repay a loan. Various factors affect your overall credit score. These can be paying off your past loans, paying your EMIs on time, reducing the number of credit cards and paying your credit card bills on time, etc. All this will improve your credit rating and can hence increase the chances of your Personal Loan application getting approved. A good credit score can also decrease your Personal Loan interest!
5. Ascertain that you have no other financial commitments: As you go further in life, it is normal for your financial obligations, responsibilities and commitments to increase. However, when you apply for a loan, ensure that you either have no other financial obligations that could cause delays in repayment, or you have enough investments and income to take care of your responsibilities. In case you have certain financial commitments that can be cleared before you apply for the Personal Loan, do so to improve your chances.
How Can An Online Eligibility Calculator Can Be Used to Check Personal Loan Eligibility?
There is a simple way that you can check Personal Loan eligibility online. Just follow these steps :
1. Step 1: Fill in your date of birth, the name of the company where you are employed, your net monthly salary, your combined monthly EMIs on past loans taken, the total outstanding on your credit card, and whether you have a home loan.
2. Step 2: Click on the button below that reads 'Check your Eligibility'.
3. Step 3: You will see the maximum loan amount that you are eligible to apply for.
It's as simple as that!
Looking for a Personal Loan to use as you wish? Be it for wedding expenses, funding your or your child's education, financing a trip, renovating your house, paying for medical bills or consolidating your credit card debt, you can use a Personal Loan as per your unique requirements. Bajaj Finserv offers you Personal Loans with low interest rates, instant online approval, and quick transfer of funds, which can reach your account in as less as 72 hours!