It would not be wrong to say that at least once in a lifetime, every individual looks forward to borrow the personal loan from banks/NBFCs. And, as the name suggests, these types of loans are borrowed when you are in urgent need of financing your child’s education, going on an exotic trip, purchasing a new household product or renovating your home. Well, whatever your needs are, personal loans being known as unsecured loans, do not need any kind of security from the borrower. But, before going for a personal loan, you should be ready at your end as it is not easy to avail this loan. Different banks have different eligibility criteria when it comes to offering this loan. So, focus on the points below to know about what all parameters banks consider very strongly before applying for personal loan.
Your Current Income
Before sanctioning the loan amount, banks do consider your present monthly income in order to figure out your capacity to repay the loan. Not only this, in fact, banks are also keen to know the amount of debt that you are owing currently. It is important for lenders to check your debt-to-income ratio so as to know whether you will be able to repay the loan conveniently or not. Moreover, the lower this ratio is, the more chances for you to be in the good books of lenders.
Those applicants who are having the stable employment history can have the more chances of getting the personal loan approved easily. While on the other hand, those who keep on switching their jobs very often are actually not considered by the banks. You need to have the job stability so that lenders can have faith in your work profile.
Calculating Equated Monthly Installments (EMIs)
When it comes to calculating the equated monthly installments, they are calculated on the grounds of current income and various other monetary commitments. In order to know the exact amount of you EMI that you need to pay every month with respect to your financial sources, you either ask the bank to do the same for you or you can use an EMI calculator for more accurate results.
Your Credit Score
However, one thing that needs to be mentioned here is the fact that when banks are not paying much attention to the security norms, it is well understood they will judge you on your potential of loan-repayment associated with the credit score. If your credit score is 750 or above out of 900, you need not to worry as plethora of reputed banks and NBFCs will be more than happy to provide you the loan. The applicant having less credit score should start looking for certified online lenders, who only entertain the borrowers with lesser credit rating.
Sound Repayment Capability
If you have struggled somewhere in life in order to repay the loans, unfortunately this thing will go against you. Yes, because banks always prefer such candidates who pay their EMIs or bills on time, and don’t create any fuss later. Not only this, in fact other crucial factors such as age, utilization of money lent, relationship with the bank, etc also play a pivotal role in this scenario. If you are having the sound repayment capability, this thing will ultimately add brownie points to your prospective loan application.