The digital revolution in India is here to stay, and no sector makes it more apparent than banking and e-commerce. Whether you wish to buy something, transfer money, or apply for loans, you can do everything digitally. Armed with your smartphone, you can look for loans online, assess a lender’s eligibility criteria, and apply for an Instant Personal Loan within minutes. This article explains the general Personal Loan eligibility criteria and its many features.
Personal Loan Eligibility Criteria
Most lenders, whether they are banks or Non-Banking Financial Companies (NBFCs), typically set similar eligibility criteria for Personal Loan approval. To be eligible to apply for a Personal Loan, you must ascertain the following:
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Your Credit Score, Which Should Typically Be Above 700:
The most vital eligibility criterion for all loans; your credit score plays a significant role in determining whether your loan will be approved. While banks usually require you to have a higher credit score ranging from 700/750+ points, NBFCs may be more lenient. However, you should note that they may levy higher interest rates on loans approved with lower credit scores.
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Your Age at the Time of Loan Approval and Final EMI Payment:
Under the Indian Contract Act, 1872, you should be an adult to be eligible for a loan, which means you must be at least 18 years old. Additionally, your age at the time of final EMI repayment should be less than or up to your retirement age or 60 years, whichever is applicable. This is because your fixed income sources, (considered while approving the loan), may reduce upon retirement.
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Your Net Monthly Income and Repayment Capacity
For lenders, your lack of loan repayment capacity is a deal breaker. If you can’t convince them about your ability to repay the Personal Loan, why would they accept your loan application? As such, lenders assess your eligibility by verifying your monthly income. In most cases, it should be at least ₹15,000 – ₹25,000, after all mandatory deductions, including taxes and existing debt obligations.
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Your Employer’s Reputation and Employment Stability
Lenders are more inclined to approve your Personal Loan application, if you are employed by a reputed firm such as a government entity or a Private MNC. Factors such as the total length of employment, frequent job changes, and gaps in employment, also influence the lender’s decision. Approval chances increase if you stably employed with the same firm, for at least two or more years.
Salient Features of an Instant Personal Loan
Let’s now find out what makes a Personal Loan the preferred choice for most applicants. The following are its brilliant attributes:
- Easy to obtain: As the term instant suggests, Personal Loans are incredibly easy to get. There is no dearth of good lenders, offering attractive loans, with flexible repayment terms.
- Online Processes: There is no need for you to approach a lender in person. You can do everything, from filing the application form to completing the video e-KYC process online.
- High-Amount Sanctions: Most lenders in India offer Personal Loans starting at just ₹25,000 up to several lakhs of rupees. Some banks also offer Personal Loans of up to ₹1 Crore.
- No Collateral Required: The beauty of a Personal Loan is that you needn’t worry about providing collateral. It is an unsecured loan, which reduces your risk of losing assets.
- Unrestricted Usage: When you apply for a Personal Loan, lenders don’t ask why you need the loan. They only need assurance that the sums are being used for legal purposes.
- Multipurpose Usage: You can use the loan amount to pay for an array of expenses, such as medical emergencies, travel plans, wedding expenses, purchasing gadgets, and more.
- Tax Benefits: You can claim tax benefits, if you utilise the Personal Loan to pay for expenses deemed as investments, e.g. student loans, home renovation, business expansion, etc.
- Easy Repayment: Lenders offer extensive repayment tenures, lasting from 6 – 60 months, making EMI repayment a breeze. Some lenders may also offer 84-month repayment tenures.
- Paperless Applications: You can get instant Personal Loans without submitting any physical documents. You can fill the application online and submit soft copies of your documents.
- Flexible Loan Terms: Lenders offer terms like extra EMI payments and prepayment benefit, which allows you to reduce your total loan cost, and close the loan before its tenure ends.
Final Note:
With Personal Loans, the sky is indeed the limit, as the loan offers unrestricted usage. Besides its simple eligibility criteria and impeccable features, this loan is easy to get. Moreover, lenders offer solutions that can turn rejections into approvals. For instance, if your credit score is low, or if you don’t fit the minimum income requirement, you can apply for a Joint Personal Loan with a family member with a higher score and/or monthly income.
