On What Basis a Personal Loan is Given?
Last Updated : June 15, 2020, 5:21 p.m.
Personal loans are unsecured in nature and do not require any collateral or security. It can be obtained with minimal documentation. Like any other loan, however, it is to be paid in monthly installments. You can use the loan to fund expenses such as education, wedding, family trip, renovation, medical expenses, and even buy a gadget like an iPhone. You can even use a personal loan to meet other expenses.
But how do you get a personal loan ? The lender would provide you the loan if you meet the eligibility criteria it sets in terms of age, income, credit score, etc. Read this post to know these criteria in detail.
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Age
You need to be a minimum of 21 years to apply for a personal loan if you are salaried. In case you are self-employed, the loan will be given once you become 24 to 25 years old. The maximum age of the salaried and self-employed applicants is 58 years and 65 years, respectively.
Income
Your monthly income is the next factor you must focus on because if your income is not up to the bank or NBFC requirement then you won’t get the loan. What is the minimum income to borrow a loan? Your income should be a minimum of INR 25,000 per month to get a loan. But some of the banks and NBFCs can offer you a personal loan even with an income of INR 10,000.
Credit Score
If you don’t know about the credit score then you must check it before you apply. Because, if the score is low, you can’t get the loan even if the above factors are positive. What is a credit score? It is the numeral representation of your payment records. Using the score, banks and NBFCs can know the applicant’s creditworthiness for the loan. The score ranges from 300 to 900, and if your score is 750 or above, the lender considers your loan request and approves it.
Current EMI or Monthly Expenditures
Do you have an existing loan? If yes then the EMI payment of your current loan is taken into account to calculate your eligibility . Because, for most of the applicants, it is difficult to pay two EMIs at the same time. So the bank or NBFC approves his/her new loan only if the income is high and the user has not defaulted in his/her payments.
So make sure to keep these points in mind while applying for a personal loan.