When you need money urgently, a personal loan might help you get through the difficulty. Personal loans are frequently used by people to pay for vacation costs, medical bills, home or auto repairs, wedding expenses, debt consolidation, higher education costs, and other expenses.
The most crucial factor in obtaining a personal loan is fulfilling the eligibility requirements because no asset is required as collateral security. You can get the money you need from lending institutions without putting up any assets. Prior to choosing a personal loan, always determine your personal loan eligibility. They have to make sure the borrower can make the loan payment on schedule.
Personal loan eligibility
Age– Applicants age should be between 21 and 65 years.
Nationality– Indian.
Credit score– 750+ with good credit history.
Income– Minimum monthly income should be Rs.20,000. (based on the resident city).
Important tips to boost your loan eligibility
Choose a long tenure
Longer-term personal loans make repayment simpler. You may return the loan on time and the EMI load is lessened by spreading out your payments into smaller quantities. It reduces the lender’s risk to a minimum. Additionally, it lessens the effect on your FOIR, raising your loan eligibility. The length of a personal loan with reputable lending organizations can reach 60 months. Using a personal loan calculator, you may estimate your monthly payments in advance and use smart money management to pay back the loan and interest accrued within the agreed-upon time frame.
Maintain positive credit history
Based on your history of timely payments, a high credit score demonstrates your creditworthiness. It is one of the main requirements to be qualified for a personal loan. Credit bureaus keep track of your credit behavior, including the history of all of your loans and credit cards, repayment history, and unpaid amounts, and use this data to determine your credit ratings. With a few strategies, you can keep your credit score high. As a result, if you want to acquire the greatest personal loan, make sure you have a track record of timely payments.
A high credit score will increase your eligibility and enable you to take out a larger loan at a more affordable interest rate. By paying your EMIs on time, you can raise your credit score. Your credit score might suffer from even one missed EMI.
- Maintain a low credit utilization ratio.
- Take into account approving new cards with a high limit
- Timely manage your credit card payments
Limit your fixed-obligation-to-income-ratio
Before granting your loan request, lenders must assess your ability to repay. They compute your Fixed Obligation to Income Ratio (FOIR) in order to determine how much income you now have available to pay down your debt. Your creditworthiness rises if you pay off your debts with a small amount of your income. A loan application with a FOIR up to 40–50%—which includes the EMI of this new loan as well—is more likely to be approved by a lender. As a result, you should settle your credit card and dues before submitting a new loan application. Your FOIR will remain within the range that the loan institution prefers.
Show alternate source of income
Your ability to obtain a personal loan may increase if you have an additional source of income. Your leased property’s rental income can be displayed. By applying for the loan jointly, you might boost your eligibility if your partner has a job.
Avoid multiple application altogether
Hard inquiries are made by lending organizations to a credit bureau to determine the likelihood that a loan applicant would default. These are listed in the credit report for the applicant. Lenders may reject your loan application if you have too many difficult inquiries because this makes you a high-risk applicant. Consequently, submitting many loan applications at once can lower your credit score.
One of the causes of a loan being denied is a credit-hungry attitude. Therefore, before asking for a personal loan, research different loan offers and steer clear of anything that can make you less eligible for one. To determine your online loan eligibility, use a personal loan calculator. To improve your chances of having your loan application approved, find a lender who has minimum requirements for personal loans. Try your current lender first before seeking for a personal loan with a different lender.
So, in this technological age, obtaining a personal loan is a practical finance choice to cover all of your anticipated and unforeseen needs. Before submitting an application for a loan, you must make sure you meet the requirements.
