Are you looking for a personal loan to meet your emergency expenses? A personal loan is one of the best sources of funds in case of contingencies. You can use the money for emergency medical expenses, renovation, marriage functions, education, etc. But, to get your loan sanctioned, you must fulfill the eligibility criteria. Here are five simple tips that will help you to ace your personal loan eligibility like a pro!
- A Higher Credit Score means better Loan approvals
A person with a good credit profile has more chances to bag a loan approval. A credit score of more than 750 shows that you are a responsible borrower and you repay your debts as and when they fall due. On the contrary, a credit score below 750 shows a substandard credit history.
- Avoid Multiple Loan Applications
You should never apply for multiple personal loans from different banks simultaneously. This reduces your credibility as a borrower. A bank verifies your credit report using tools like CIBIL. Multiple inquiries not only cut down your credit score but also show your desperation to avail of a loan. This can slip you into the high-risk category and make your loan approval chances bleak.
- Every Penny Counts
You must add all the sources of income to your loan application, even if it is a small amount. The banks take into consideration all your sources of income. This will not only improve your debt-income ratio but also show that you have apt resources to pay your debts timely.
- Debt-to-Income Ratio
It is by far, the most important personal loan eligibility criteria.
- Banks can lend up to 50% of your debt-income ratio.
- This means that the EMIs of all your loans combined must not be more than 50% of your monthly income.
- A lower ratio gives you more borrowing cushion and also ensures that you have enough money to pay the EMIs on time.
- When you apply for a personal loan, a 15% debt-income ratio is accepted by banks for any existing loans.
- Hence, you must pay off excess loan and credit card baggage before applying for a personal loan.
- Choose your Lender wisely
You must check the eligibility criteria and requirements of all the banks. You should choose the bank whose lending criteria match your profile. You must select the bank which has simple personal loan eligibility criteria. This increases the chances of a successful loan application.
Personal loan eligibility criteria
You must opt for a bank that offers personal loans with simple eligibility criteria. Preparing well in advance by checking the required criteria can spike your chances of getting a loan successfully. You will be required to comply with the following loan criteria to be eligible for availing of a personal loan:
Age: 21-55 years
Employment: Must be employed with the government, public sector, private sector, or MNCs.
Income: More than Rs. 25,000 per month.
Loan Amount: Up to Rs. 25 Lakhs based on your income.
Collateral: No Collateral required.
Repayment: Tenure is 60 months (But you can pre-pay when you have excess funds)
Multiple Withdrawals: You can also make multiple withdrawals as and when required.