personal loan eligibility

Personal Loan Eligibility – Guide 2022

Banks and NBFCs use a number of variables when determining whether you qualify for a personal loan, including your credit score, age, income, employment, and employer profile. The qualifying requirements for personal loans established by prominent lenders are shown below.

Check personal loan eligibility by different lenders.

LendersEligible Loan AmountMinimum Eligible IncomeEligible Age
YES BankUp to Rs. 40 LakhOn a case by case basis22-60 years
Standard Chartered BankUp to Rs. 50 LakhOver Rs. 22,000 per month22-58 years
Kotak Mahindra BankUp to Rs. 25 lakhRs. 25,000 per month21-58 years
IndusInd BankUp to Rs. 15 LakhRs. 25,000 per month21-60 years
Axis BankUp to Rs. 15 LakhRs. 15,000 per month21-60 years
Punjab National BankUp to Rs. 25 LakhRs. 15,000 per monthAbove 18 years
Tata CapitalUp to Rs. 25 LakhRs. 15,000 per month21-58 years
Bajaj FinservUp to Rs. 25 LakhRs. 25,000 per month21-67 years
HDFC BankUp to Rs. 40 LakhRs. 25,000 per month21-60 years
ICICI BankUp to Rs. 25 LakhsRs. 17,500 per month23-58 years

Factors Affecting Eligibility

Monthly Income

While monthly income is a significant factor for all loans. The lender would want to confirm that you receive a sufficient monthly income to enable you to make timely loan repayments. The higher your income, the higher the loan amount you will be eligible.

Credit Score

Based on your credit history, a credit score is a three-digit number. In other words, it enables the lender to see how responsible you have historically been with credit, such as loans and credit cards. For instance, the CIBIL score, which ranges between 300 and 900, is used by the majority of lenders in India. 

Lenders often favor applicants with a CIBIL score of 750 or higher. Prior to applying for a loan if your CIBIL score is below 750, you should work to raise it in order to ensure that you are eligible for a personal loan from the lender.

Age

Your age helps the lender in determining how many working years you have left. Lenders often prefer salaried applicants between the ages of 23 and 58.

The age range for self-employed professionals and non-professionals is 28 to 65 years old. People in this category can continue working over the average retirement age of 55 to 58 years because they are self-employed. The maximum age is therefore 65 years old.

Existing Liabilities

Your existing liabilities are the  important factor of the eligibility requirements for personal loans. The lender wants to know in detail about any liabilities you are already repaying, such as home loans and so on.

The lender would then want to ensure that you have enough income to repay both the new Personal Loan you wish to undertake and your current liabilities.

Housing Condition

Your chances of having your application accepted are better if you live in your own house. The cause of this is that renting reduces your disposable income, which diminishes your capacity to repay.

Tips To Boost Your Personal Loan Eligibility 

 Choose A Longer Tenure

Long-term loans make it easier for the borrower to make payments over time. This improves the likelihood that the personal loan will be repaid on time, lowering risk for the lender.

Payoff Of All Outstanding Debts

Try to eliminate any outstanding loan installments before you apply for a personal loan. In the event that you already have loans, the lenders may view you as a risky borrower. This could reduce the possibility of your loan being approved. Therefore, it is always advised to settle all current debts before submitting an application for a new personal loan.

Never file several loan applications simultaneously.

Applying for various loans at once will result in numerous enquiries from lenders, which will gradually lower credit score. They may also deny loan application.

Therefore, it is essential to compare lenders in advance and submit an application to the          one that most suits your needs and personal loan eligibility.

Obtain joint loans with your spouse.

If your spouse earns a salary, you can even apply for a joint personal loan, which will boost your loan eligibility because it will increase your household’s overall income and provide the lender with more assurance.

Alternative Source Of Income

Before approving your loan application, financial organizations always verify your income. Additionally, having a different source of income may make you more eligible for a personal loan. There are numerous ways to generate this additional income. Additionally, while applying for a personal loan, you should also include an updated record of your variable pay. Most employers provide variable pay as a perk in the form of commissions, bonuses, or incentives. Some financial companies use this history to determine your eligibility for a personal loan.

How Banks Determine Eligible Personal Loan Amount for a Person

Credit score, current income level, and current obligations are some of the major aspects that decide the maximum loan amount that may be sanctioned to you, even though loan approval criteria may vary from bank to bank.

A high credit score (nearer to 900) indicates that you have paid off past loans and/or credit card balances on time, giving lenders confidence that you are a reliable borrower and allowing them to approve a larger loan amount.

Your ability to make payments depends directly on your present income level and your liabilities (including any unpaid loans, credit card balances, and current EMIs). As a result, you would be granted a lower personal loan amount than someone with a higher salary or fewer financial obligations if you fall into a lower income bracket or have a lot of unpaid credit card bills or outstanding loan EMIs.

How To Improve Personal Loan Eligibility?

Use these five simple tips to increase your eligibility for personal loans.

Minimize Your Debt-to-Income Ratio

Make sure to settle your credit card debt and any outstanding debts before applying for a personal loan to lower your debt-to-income ratio.

Your present obligations and outstanding credit card balances could represent you as a credit-hungry borrower and make it difficult for you to qualify for a new loan.

The total amount of EMIs you are currently paying should ideally not exceed 30 to 40 percent of your monthly income. If it is more than that, settle it before submitting an application for a new loan.

Enhance And Keep Your Credit Score

Lenders use your credit score to assess your creditworthiness because personal loans are unsecured.

You can present yourself as a trustworthy borrower who makes consistent payments if your credit score is 750 or higher.

As a result, the lender sees no risk in lending to you, which greatly improves your chances of being accepted.

List All Of Your Sources Of Income.

In order to determine your ability to repay, lenders will also consider your income.

As a result, when completing the online loan application form, you must list all of your income sources, in addition to your regular income. By doing this, you may indicate to the lender that you have a sufficient income to make repayments on time.

Avoid Making Several Loan Applications Simultaneously.

Lenders do an inquiry with a credit company when you apply for a loan to determine your default risk.

Therefore, it is essential to compare lenders in advance and submit an application to the one that most suits your needs and personal loan eligibility.

Select A Lender Whose Eligibility Criteria You Can Meet.

Check the eligibility requirements of many lenders to identify the one whose requirements you can meet, rather than submitting applications to several lenders just to discover that you are not qualified for their loan.

Can I Get Personal Loan With Low CIBIL Score?

You can be eligible for a personal loan even with a low CIBIL score.

It is difficult, but it is not impossible.

It depends on the bank’s decision. However, if you submit an application for a personal loan with a low credit score, you can be given unfavorable terms regarding interest rates, the amount of the loan, and other loan benefits.

How to check CIBIL score?

Here’s how, according to the CIBIL website, you may check your credit score.

Step 1:- Log in to CIBIL website

Visit the CIBIL website https://www.cibil.com/ and click on “Get your CIBIL Score” on the top right-corner of the page.

Step 2:- Create an account

Your name, which will serve as the username for this account, your password, an ID evidence (such as a PAN card, passport number, voter ID, or Aadhaar), your date of birth, your pin code, and your phone number must all be entered here.

After entering this information, click “Accept and continue.”

Step 3:- Establish your identity.

You must then prove your identity. A one-time password (OTP) will be sent to the cell phone number you provided in Step 2. Type in the OTP and press “Continue.”

Step 4:- Go to the dashboard.

A new window confirming your enrollment will open. Additionally, you’ll receive an email verifying the same. In order to view your credit score, click “Go to dashboard.”

Step 5:- View CIBIL Score 

Your browser will now open myscore.cibil.com. CIBIL Score and CIBIL Report is available to subscribers here for reviewing.

Can I Increase My Personal Loan Amount?

Yes, you can increase the size of your personal loan by increasing your eligibility. Your income, ability to repay the loan, and CIBIL score are some of the elements that lenders consider when determining the loan amount. Your chances of getting a higher loan amount increase with a higher credit score.

When requesting a larger loan amount, keep the underlying factors in mind:-

  • In order to give personal loans, lenders consider your payback history to be significant. You must continue to have a strong payback record.
  • Additionally, you need to confirm that your credit score has remained healthy. You can get a larger loan amount if your credit score is higher.
  • A longer repayment period allows you to take out a larger loan because the monthly EMI is lower. Keep in mind, however, that a longer term also entails paying a higher total amount of interest.
  • You must make sure you have paid off any outstanding debts before applying for a personal loan. Because it affects your ability to repay the loan, an existing loan may result in a reduced loan amount.
  • Multiple sources of income boost your eligibility for a greater loan amount because they reassure the lender that you will make your repayments.

FAQs related to Personal Loan Eligibility

What Is The Minimum Salary Required For A Personal Loan?

Few private-sector lenders will grant you a personal loan even with a salary of Rs. 15,000 whereas most lenders have a minimum salary requirement of Rs. 20,000.

Is There Any Advantage Of Taking A Personal Loan From Your Current Bank Where You Have An Account?

Additionally, banks provide pre-approved loans to a small group of good-profile holders of savings accounts. Additionally, returning customers can benefit from cheaper interest rates and processing costs on a variety of loans, including personal, home, and auto loans. This is a remarkable benefit for Savings Account holders who require cash immediately.

What Is The Minimum Age Limit For Personal Loan?

The majority of banks and NBFCs offer personal loans to borrowers having a minimum age of 18.

What Is Repayment Duration, How Does It Affect EMI?

A personal loan can have a term as long as 60 months, with a minimum of 12 months. Depending on the borrower’s income, credit history, and needs, the personal loan’s term, amount, interest rate, and monthly payment may change. These are also the main elements that determine the terms of the loans. 
The longer the repayment duration, the smaller the EMI that must be paid.
Although you might be tempted to choose a longer repayment period, doing so will definitely result in greater interest payments over time and a higher overall repayment amount. Therefore, choose a shorter repayment term if you can.

What is a Personal Loan Eligibility Calculator?

Personal Loan eligibility calculator is a tool to determine your maximum borrowing capacity based on your income and ability to repay the loan. Your eligibility for a personal loan will be based on a number of variables, including your income, employment, credit history, other financial obligations, age, etc.

How Long Does It Take To Get Approval For Personal Loan?

A personal loan’s approval process typically takes one day to one week. As we already discussed, a number of variables, including your credit score, affect how quickly a personal loan is approved.
The source of your loan, however, is one of the main variables that will impact how quickly you are approved. 

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