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A personal loan is a loan of convenience, as you can use it to fund any financial need. This makes it a reliable solution in case of emergencies. Also, you can use such a loan to meet your goals, whether that’s starting or expanding your business, obtaining healthcare, going on a family vacation, renovating your home, or planning a wedding.
Moreover, it is an unsecured loan, so you don’t have to worry about pledging an asset. However, lenders require you to meet certain eligibility criteria before they approve your application.
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What Criteria Do Lenders Use for a Personal Loan?
Your personal loan eligibility is measured by the specific criteria set by your lender. Though every lender has their own criteria to gauge your repayment ability, they follow a common set of requirements. These include age, income, credit score, and a few others. Meeting these criteria can get you a loan that meets your needs at competitive interest rates.
To see if you are eligible to get a personal loan, use your lender’s online personal loan eligibility calculator. However, if the results are not satisfactory, work on your shortcomings before you apply for a personal loan. This way, you will increase your chances of getting an approval on your personal loan application.
How Can I Increase My Personal Loan Eligibility?
The following three tips will help you qualify easily for a personal loan.
Show That You Earn Adequate Income
You can only repay a loan if you have adequate financial means to do so. Therefore, if lenders see that you are not capable of repaying the loan, they are likely to reject your application. For this reason, it is important to show that you have adequate means to accommodate a loan.
You might ask, “What is the minimum salary lenders require for personal loan?” The answer is not definitive. That’s because the requirement varies across lenders and is based on your city of residence. For instance, the minimum salary required for a Bajaj Finserv Personal Loan is between Rs.25,000 and Rs.35,000 a month.
If your income is not adequate according to your lender’s rules, you can wait for it to increase. Alternatively, you can disclose additional sources of income such as deposit interest, rent, and other sources. This way, the lender will be reassured of receiving their repayment.
Service All or Most of Your Existing Loans
Having an outstanding loan means that every month you will have to use up a portion of your monthly income to repay it. An additional loan means an increase in your financial responsibility. Further, if you don’t manage your finances well, you stand the risk of missing or delaying your monthly payments. This represents a potential risk to lenders. So before you apply for a personal loan, repay your existing debts and enjoy a speedy approval.
Maintain a Good Credit Score
A good credit score of 750 and above shows that you have a good repayment history and are financially responsible. It shows that you have not defaulted on your previous or ongoing loans and can manage a new one. So maintain or work on your credit score before applying for a new loan. To be extra cautious, request your credit report before you apply. In this way, you can make sure there are no discrepancies or correct them if there are any.
Follow These Simple Tips and Qualify for a Personal Loan
These simple yet effective tips can help you increase your personal loan eligibility. Also, look for lenders that have simple criteria in the first place. This will increase your approval chances. For instance, top non-banking financial companies (NBFCs) have simple personal loan eligibility criteria as listed below. You should be:
- A resident Indian
- Between 23 and 55 years of age
- Employed with a multinational corporation (MNC), or a private or public company
Follow these simple steps to improve your personal loan eligibility.