Are you applying for a personal loan? There are several benefits of personal loans and the most important one is the multipurpose usage. Personal loans come in handy when it comes to tackling diverse requirements. They can be used to cover costs of medical emergencies, weddings, home renovation, higher education, vacations and even for consolidating existing debt.
However, prior to applying for a personal loan, you should always have a clear idea about the eligibility criteria for personal loans. The eligibility criteria vary from one lender to another but you should always know the amount that you are eligible for. This is possible through an online personal loan eligibility calculator. Personal loan eligibility criteria is the basic criteria that has been established by a lender for determining whether a borrower can be approved for a personal loan or not. It also assures the lender that the borrower possesses the ability to repay the loan in question.
Personal Eligibility Criteria is thus the integral guideline which helps lenders assess whether an applicant is eligible to get the loan or not. This is useful since it gives a layer of security for the lender and also builds trust since personal loans do not require any collateral and are essentially unsecured loans. A loan which is not repaid on time becomes a headache and liability for a lender.
Here are some ways in which personal loan eligibility criteria benefits lenders:
- Trust/Safety- Lenders are naturally anxious about repayment of a personal loan that has been approved. The eligibility criteria helps zero in on customers who have the financial ability to repay the personal loan. This lowers overall uncertainty for lenders.
- Greater efficiency- There may be innumerable applicants for a personal loan and the eligibility criteria helps filter out borrowers who do not fit the minimum requirements.
- Authenticity- The several KYC documents including salary slips, ID and address proof, employment proof and so on, help in establishing authenticity of the borrower. This helps in eliminating fake profiles from the banking system.
- Designing of Loan Offers- The eligibility criteria offers various borrower details to lenders. This helps in designing better loan products to suit the needs of varied income groups and diverse customer profiles.
In case there was no eligibility criteria, lenders would find it next to impossible to narrow down and choose applicants. This could lead to delays in approving and disbursing loans. There would be absolutely no basis for deciding on who is eligible for a loan, thereby leading to a reduction in overall transparency related to loan approvals.
Most lenders consider the net monthly income, credit score, age, employer and business performance or even balance sheets (in case you are self-employed) and so on. These details help lenders decide not just whether you will be eligible to get a personal loan but also the interest rate that you will be charged and the loan amount that you would be eligible for. This calculation can be done through using a personal loan eligibility calculator online. Your income assures the lender as to how much you can repay and other financial documents like bank statements and salary slips may be sought to verify your income. Employment status also matters. Unemployed applicants have a high chance of having their personal loan applications rejected as compared to those with a good job and stable employment history. Employment proof has to be submitted to authenticate this fact.
Your age also matters. While criteria varies amongst lenders, age is required to be between 25-59 years in usual cases. Young borrowers are seen to have higher potential for increasing their monthly income in the future and eligibility may go up. The required CIBIL score for personal loan should be 750 while a poor credit score below 700/650 can lead to your personal loan application being rejected. The credit score helps lenders determine the interest to be charged on your personal loan. The better your CIBIL score, the lower your interest rate.
The personal loan eligibility calculator are borrowers best friends, helps you find out how much you are eligible to get by way of your personal loan amount on your current salary. You only have to fill in some basic information and calculate the same. There are several ways to improve your personal loan eligibility. You should focus on getting a steady job and work hard to improve your monthly income and career prospects. Try and increase income with alternate occupations and business interests or even investments. Always maintain a good credit score by keeping fewer credit cards and making all payments on time. Try and make sure that you do not have any other financial commitments before applying for the personal loan.