Top 3 Personal Loan Eligibility Criteria that Tip the Scales in your Favour

Top 3 Personal Loan Eligibility Criteria that Tip the Scales in your Favour

Looking for a personal loan? But, worried whether you meet the eligibility requirements of the lender? Make sure to check out the top three factors that influence your loan sanction outcome and proceed on the right track.

A personal loan is an excellent financial product that helps you tide over short-term cash requirements. Generally, people opt for a personal loan for – loan restructuring, wedding expenses, home renovations, vacations, emergency medical expenses and more.

If you’re considering availing a personal loan, then it pays to be aware of the various eligibility criteria. While the exact terms and conditions of these criteria vary from one lender to another, most lenders have a standard set of eligibility requirements. Here, in this post, you can find all that you need to know about personal loan eligibility in India.

Top Factors that Play a Crucial Role in Determining Your Personal Loan Eligibility

  • Age

For starters, to avail a personal loan, you have to be an adult. Generally, banks and other financial institutions offer such loans only to individuals who are 21 years or older. While the lower age limit is pretty fixed, the upper age limit is flexible (to some levels).

The official upper cut-off limit is 65 years. However, if you’re older than 65 years, but have excellent credit ratings and are still part of the working force, then your eligibility is up to the discretion of the lender.

  1. Income Levels and Occupation

Remember that these loans are unsecured. Meaning, you don’t have to submit any collateral to avail it. Unlike home loans and two-wheeler loans, that are minimum risk products for the lender, a personal loan is highly risky from the lender’s perspective.

So, the lender makes sure that you’re capable of repaying it, before lending the loan amount. This is why your income levels and occupation are scrutinised as part of the eligibility check.

You’re assessed in one of the following three categories:

  • Salaried Employees
  • Must have a net monthly income of 35,000 INR or more
  • Must have been employed for at least two years, and preferably completed six months at your current organisation
  • Self-Employed Professionals – This includes engineers, doctors, architects, chartered accountants, consultants, and other professionals who run their own firm.
  • Must have a net annual income of 4.8 lakhs or more
  • Should have been practising their profession for four years or more
  • Self-Employed Individuals – This includes business owners who are directors, proprietors, partners in a private or public firm.
  • Must have a net annual income of 4.8 lakhs or more
  • Should have been running the business for at least five years or more
  1. CIBIL Score

This is one of the most important factors that determine whether your loan application will be approved or not. CIBIL score is a numeric number that indicates your loan repayment ability. It’s based on your entire credit history – your previous loans, credit card balances, and other financial transactions.

Higher the number, the better is the confidence of the lender on you. Most lenders look for individuals who have a credit rating of 750 or more.

Overview of the Eligibility Requirements

Generally speaking, the eligibility criteria for personal loans are more relaxed when compared to other long-term loan products like housing loans, etc. If you satisfy all the three criteria mentioned above, then you can be sure that your loan application will be processed without any hassles. If not, make sure to get these factors in order, before applying, to improve your chances of loan sanction.