Here’s What No One Tells You About Personal Loan Eligibility

Introduction

Personal loans are great when it comes to supporting your emergency financial needs. Whether it’s unplanned travel, supporting your child’s education, funding for medical expenses, or home renovation, a personal loan is a multipurpose loan that can be used for your personal finance needs. Although online personal loans are easy to avail, there are some criteria a loan applicant must fulfil to be eligible for a personal loan.

This blog tells you exactly the considerations you should consider when you want to apply for a personal loan.

Eligibility Criteria for a Personal Loan in India

1. Age Requirements

   For instance, for personal loans in India, you must be 21 to 55 years old.
   

2. Citizenship Requirements

   In India, you must be an Indian citizen to be eligible for a personal loan.

   
   

3. Credit Score Requirements

   NBFCs, in India, generally ask for a good credit score above 6oo. Personal loans are generally unsecured loans where you do not need to submit any collateral. Hence, the lender assures your creditworthiness by analysing your credit history.

   
   

4. Employment Stability

   You must have a stable monthly income source. You must deposit the last 3 months’ bank statements to prove the same. Also, in some cases, you might be required to submit the employment letter. For salaried professionals, the minimum monthly salary requirement is 20,000 INR.

   For self-employed individuals, the minimum monthly income requirement is 25,000 INR.

   
   

5. Debt-to-Income Ratio

   Debt-to-income ratio, also known as DTI, is a percentage of your monthly income going towards your debt in the form of repayments. If your DTI is low, it indicates better financial health, and the chances of loan approval are higher. Generally, lenders in India prefer a DTI ratio of 40% or lower.

   
   

6. Loan amount

   You must be able to repay the loan with your monthly income. The loan amount you are asking for in your loan application must be a realistic amount based on your financial profile.

   
   

7. Loan Repayment Tenure

   Here, you also need to keep in mind that choosing a short repayment period would help you repay faster, but on the other hand, it also increases the monthly instalment you will be paying.

What Documents Will You Need to Apply for a Personal Loan

1. Identity proof

2. Proof of income

3. Proof of Address

4. Last 3 months’ bank statement

How You Can Increase Your Loan Eligibility

1. Keep working on your credit score. Keep paying your bills on time. Even if you do not need a personal loan right now, working on a credit score in real time can always keep you safe during financially low times.

   
   

2. Increase your income. Start a side hustle. Start freelancing and increase your income. It would help you bring your DTI ratio down.

   
   

3. Keep your DTI ratio low. Clear your current outstanding debt and bring your DTI ratio low.

   
   

4. Apply with a co-applicant. Have a co-applicant for your loan profile to strengthen your credit profile.

Conclusion

Keeping your important documents ready in prior can help you save a lot of time during emergencies. Also, knowing it in advance before starting any online personal loan application helps you complete the process faster when you have these documents ready.

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