Sometimes we are in dire need of funds, either to pay off our bills, to buy expensive commodities or for medical emergencies. We can plan our long term needs, but the imminent problems require an immediate action. This is the time when we look desperately for our options so that our problems can be solved. The immediate requirement of funds can be met easily through a Personal loan. It is the most easily accessible loan, where a reason to avail it is generally not asked by the lender.
Once we are sure that we are in need of instant money, the next question that follows is “will a bank give me a personal loan?”. Well the answer is more likely to be a “YES”. But there are several requirements and eligibility criteria which are considered during the approval of an application.
Understanding the eligibility criteria for Personal Loan disbursal
Know your credit score – Initially, a bank concentrates on the eligibility criteria and place the recipient under good, average or bad credit. The credit score is mainly based on the history of payments, length of credit history, previous loans history and its length of repayments, types of credit used etc. Taking all these factors into accounts a bank decides your credit score and the higher the score you have a better chance to get the desired loan. Major credit scoring model follows 300 to 850 points. Anything below 500 is considered as a bad credit score.If by any reason you get a bad credit score, still there are ways to get a personal loan. You fall into bad credit then banks usually charge the interest rate between 12% – 20%, which is generally higher than those with a good credit score. A bad credit loan comes under high annual percent rate(APR).
- The eligibility criteria required by the banks to get a personal loan mostly include factors like age, monthly income and salary, type of job, job stability etc. Generally the banks give a personal loan to anyone aged between 21 to 60. While some other banks can extend the age limit to 65 for the self- employed.
The nature of the job – If you are a salaried individual or self-employed. One has to show the proof of their job. For the salaried individual, minimum 1 years of work experience is required while for the self-employed at least 3 year of experience is required.
The minimum salary should increase an amount of 15000 Rupees for a salaried individual while the business of self-employed should show the profit after tax deduction. The higher you earn the chances of getting a personal loan is higher. Some banks have high income criteria and sanctions loan to a person with monthly income more than 20000 Rupees. It checks whether you are eligible to pay the monthly interest rate or not.
- Certain additional documents are required to produce to the lender if you are self- employed like the ITR with the computation of income. Along with this, you require a buisness as well as residential proof and last one year's bank statements. While the salaried person also need the residential proof and last 3 month bank statement.
The job stability is another factor that enhances your chance of getting a loan. The salaried person needs to hold the position in current job for at least 1-2 years while a self-employed needs to have his business setup for at least 3 years.
The KYC form is also necessary to get a personal loan. The proof of identity in form of aadhar card, PAN Card, Passport, voter id etc is important to produce while filing an application for a personal loan.
If you have all the required documents and qualify the eligibility criteria. Then you are good to go. You can apply for the loan in the bank where you hold an account, you will have the best chance of getting one quickly. As the bank is familiar to you, knows your credibility and have access to your financial status, you can ask them for low interest rates and the processing fee through negotiation. Thus, you can avail a personal loan in no time and meet your demand.