Money is one of the most essential things required to shape our lives. Money has the potential to turn our dreams into reality. But the difficulty which we need to face at many occasions is the lack of sufficient money. However, the lack of money can be detrimental on various occasions, but one should remember that there are multiple ways through which one can bridge the gap between the reality and dreams. One such quick access to money can be achieved by availing a personal loan. There are certain criteria which decides your loan accruing capacity. Every person who is in need of personal loan, may not be in a position to avail a loan.
Among all the loans, personal loans are the one for which has always been popular among the borrowers. Personal loans can help anyone meet any shortfall of money, which they might experience in situations like while buying a house or a car, for their children’s higher education and even in cases of medical emergencies. Another reason that makes a personal loan more favorable for the customers is its unsecured nature. The unsecured nature makes the customers relaxed about any equity, collateral or guarantor against their loan.
Benefits of Availing a Personal Loan
Has no Limitations on its Use- Money borrowed through a personal loan can be used for any personal use of the borrower. There are no restrictions and limitations on its use. One may use it in availing higher education, marriage expenses, home renovation, medical care or anything else, even just to party. It has no limitations like other loans available in market.
No Need for Equity Sharing– Even if you purchase something expensive through it, there is no need to share the equity.
No need of collateral- Personal is unsecured in nature and hence there is no need to give any collateral or guarantor against the loan.
Fast Approval– As a personal loan is unsecured in nature the documents needed are comparatively less than any other kind of loan, this makes the documentation process faster. A fast documentation process makes the approval and disbursal faster.
Availability of Online Personal Loans- With the advancement in technology personal loans are now available online. One can avail a personal loan with just a few clicks. Online availability has made it fastest processing loan which can be availed within minutes.
All these benefits of a personal loan can be enjoyed by a loan seeker only if he/she is considered eligible for the same. Here is how can one be eligible for a personal loan at any given time.
Eligibility to Avail a Personal Loan
Although the eligibility criteria for a personal loan varies from bank to bank there are some general criteria which include applicant’s age, occupation, income and the repayment capacity of the borrower.
Income–To avail a personal loan, one must have a regular income source. The minimum amount of monthly income varies from bank to bank, the amount of incomes also varies when you are a salaried individual, self-employed business person or a professional. An individual’s eligibility for a personal loan is also affected by the company he or she is employed with.
Age– Lenders are always more interest to lend to a younger person as compared to that of a more aged person. This is because the lenders think younger means more repayment capacity. Generally the eligibility in terms of age for a personal loan is 21 years to 60 years of age. But this can also vary lender to lender.
Credit Score- Prior to approve a loan application, lenders seek the credit score of the applicant from CIBIL or other credit bureaus. A credit score of 750 and above indicates that the applicant is highly creditworthy. Most of the lenders are confident that they run a low risk of default with the repayments when lending to borrowers with high credit score. Whereas it is difficult to qualify for a personal loan with a low credit score as lenders find it riskier to make a business with the applicants with low credit score. However, it is worthwhile to check your credit score from all three credit bureaus operating in India and use the highest one to apply for a personal loan.
Keep Your Professional Life Spotless
Lenders check creditworthiness of an applicant through his/her professional life. Every lender wants a safer deal in terms of repaying the loan. In order to check the creditworthiness, lenders checks the employment history of the applicant if the applicant is a salaried person. In the case of self employed persons, the stability of the business is checked to gauge the loan repayment capacity.
Income to Debt Ratio
Lenders always try to minimize their risk of defaulting the loan. Hence, they look for the income to debt ratio of the borrower. If the borrower is having any other previous debt, the previous EMIs should not be more than 50% of the monthly income. If it is more than that, is becomes difficult to get one more loan.
However, there are many benefits of availing a personal loan and it is always good to be a personal loan eligible all the time. There are certain things which one should always remember while availing a personal loan which are comparing the interest rate and processing charge. It is highly advised to borrow according to your requirement and repayment capacity.