Last few years have witnessed a massive increase in the number of personal loan borrowers. The easy and wide availability of personal loan is the reason which has made it one of the most popular financial product. A personal loan is that financial tool which is easily available through all the top banks and can be availed online too. A personal loan is one on which you can depend on in case of any financial emergencies.

How do Lenders Calculate Personal Loan Eligibility?

Banks do not even ask the borrowers for the purpose of the loan and get ready to lend money to them. The money lent is totally collateral and security free. After knowing these things you may think that getting a personal loan is so easy. However, it’s easy to get a personal loan but it’s not a piece of cake for everyone. Interest Rates for a personal loan is higher than any other loan. It is because lenders consider a personal loan as the riskiest of all loans. Every lender has some eligibility criteria which borrowers need to satisfy in terms to get approved with a personal loan.

Coming to the personal loan eligibility, most of us must be aware of the income, age, and CIBIL as these are the most important criteria to be considered by the lenders. However, very few are aware of the fact that your Employer is also one of the important factors which decide your personal loan eligibility.

Grouping Companies

Banks have differentiated companies and categorized them. This categorization depends on the company’s profile. These categories are- Super A, Cat A, Cat B, Cat C and Cat D.  Some lenders have categorized this as Diamond, Platinum, Gold, Silver.

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How this Categorization Affects Borrowers?

Borrowers employed with the top-rated companies get approved to a personal loan easily when they are already fulfilling the other eligibility criteria. In addition to this, they enjoy other benefits too such as on interest rate and on the amount borrowed.

This categorization implies that the Super Cat A, Cat A companies are higher rated than the Cat B and Cat C. Therefore, a borrower with Super A or a Cat A company will get better deals for the same loan as compared to a borrower who is employed with a  than a Cat B or Cat C.

Why is this so?

Stability is the Reason

Banks consider borrowers from the super cat A and Cat A companies as the top-rated one. This happens because lenders find borrowers with top rated companies with a stable job. Hence, they are secure that the borrower can repay the loan easily as they have a stable and secure job. Moreover, they are sure that they will not default in with EMIs.

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What to Do if You are Working in a Cat C or Non-registered Companies?

If you are one working in a non – registered companies and want to get a personal loan then in that case you should go with an NBFC or a DSA for a personal loan. This is because nationalized banks are strict with their rules and are not in favour of taking risks. On the other hand, NBFCs are somewhat lenient and are ready to lend to the browsers from CAT C and Non Recognised companies as well.

But there is a possibility of one thing, in this case, the borrower may not get as much as he wants. The upper cap of the borrowed amount decreases as they are not employed with a top-rated company.

Let us Understand this thing with the help of an Example

Suresh and Anuj are two individuals who are looking for a personal loan. Suresh is employed in a top rated MNC whereas Anuj is working for a start-up. Both are having INR. 1, 00,000 salaries. They both applied for a personal loan with HDFC. Suresh applied for a personal loan for INR. 4, 00,000 and Anuj applied for a personal loan of INR. 3, 00,000. Suresh’s loan application was approved within 2 days at an interest rate of 10% whereas Anuj’s loan application got rejected. Anuj further applied for a personal loan with an NBFC. This loan application got approved but only for 1.5 lakhs that too at 12% per annum.