Personal loans are taken out for several purposes, including weddings, children’s education, international trips, medical emergencies, and house renovations. Whatever the cause, the amount of loan customers take is heavily determined by eligibility and EMI.
When considering a Personal Loan, most customers have two questions: How much loan can I get? How much will I have to pay back each month? They may even ask if there is a means to determine Personal Loan Eligibility.
So, let’s take a deeper look at how to determine eligibility.
A variety of factors, including your credit score, age, income, occupation, and employer profile determine personal loan eligibility. The following are the personal loan eligibility criteria established by top lenders, as well as suggestions on how to improve them to increase your chances of loan approval.
Check for Personal Loan Eligibility
Personal loans are unsecured, short- to medium-term loans made to salaried individuals. Except for speculative purposes, personal loans have no end-use restrictions. As a result, you can quickly obtain a personal loan for any reason, such as a wedding, education, travel, home renovation, vehicle, and so on. To get a personal loan, you must first meet certain eligibility requirements and then submit the necessary documentation.
An emergency personal loan is a one-stop solution to all your financial problems. Personal loans are simple to obtain and have a quicker approval process, with no collateral requirements and no end-use restrictions. Here is a list of common eligibility requirements for personal loans.
- Applicants must be Indian citizens.
- Individuals must have a steady income from a public or private company.
- The age should be 21 years old.
- A CIBIL score of 700 or higher is required.
Calculator for Personal Loan Eligibility
Different lenders use different methods to calculate loan eligibility when it comes to personal loan calculators. Loan eligibility is typically determined based on an individual’s fixed monthly income status.
Some lenders calculate personal loan eligibility and repayment tenure using the FOIR (Fixed Obligations to Income Ratio) method. The formula for determining a lender’s FOIR eligibility is –
- FOIR = (Total Existing Obligations/Net Monthly Salary) * 100
Borrowers can also calculate EMI payments using this method. The net Monthly Income (NMI) method is another excellent way to determine a borrower’s eligibility. Lenders use a multiplier based on the borrowers’ net monthly income to calculate the maximum loan amount. NMI allows you to obtain a loan principal of up to 30 times your net monthly income.
How to Determine Personal Loan Eligibility
Before applying for a personal loan, it is critical to confirm your loan eligibility. In just 2 minutes, you can check your personal loan eligibility with the best personal loan eligibility calculator. You only need to take three simple steps.
- Step 1: Log in to the website and sign into your account.
- Step 2: Profile information and PAN: To check your personal loan eligibility, click the “apply now” button below. There, you can enter all your personal information as well as your PAN Card information.
- Step 3: Check loan eligibility: Now, simply click on the “Check loan eligibility” option to see your eligibility details and whether you are eligible for a personal loan.
Factors Influencing Personal Loan Eligibility
The five factors that can affect your personal loan eligibility are as follows. These are their names:
- Credit rating
One of the most important factors influencing personal loan eligibility is your credit score. If you have a credit score of 700 or higher, you will be considered more financially stable and will be able to obtain a personal loan more easily. If you have a good credit score, you can also take advantage of many interest-rate discounts and special offers.
The most important factor determining your personal loan eligibility is your income. When you take out a loan, you must be financially stable enough to repay the loan amount plus interest. A 10000 personal loan will not be granted if you do not have a steady source of income. The minimum salary requirement for salary individuals is Rs. 22,000 or higher.
- Duration of repayment
Most banks typically approve personal loans with an EMI/NMI ratio of less than 50% to 55%. Furthermore, the proposed loan cannot be more than 50% of the applicant’s annual income.
However, keep in mind that the higher your monthly salary, the higher the amount of your personal loan. If you believe that your salary will not be sufficient to obtain the loan you require, you can apply for a joint loan or a personal loan with a family member as a co-applicant.