Since the last few quarters, the overall consumer credit growth has declined all over the world, including India. However, personal loans managed to maintain their popularity, thanks to their minimum requirements and easy online availability. According to The RBI, the personal loans credit segment grew at 17% and amounted to Rs.25.3 lakh crore as of February 2020.
The statistics suggest that individuals are opting for a personal loan more than any other advance to meet their financial requirements. However, while personal loans are readily available, you may need to take measures to improve your loan eligibility for better chances of approval. Various lenders provide this borrowing option only after assessing personal loan documents checklist and other criteria. So, take a look at the eligibility requirements and how you can improve your qualification for the advance.
What are the eligibility criteria for a personal loan?
Once you are aware of how to find the right personal loan for you, the next step comprises the fulfilment of loan eligibility criteria. Before approving personal loans, every lender reviews the applicant’s job profile, income, EMI affordability, employment status, etc. to determine loan eligibility. In such cases, you need to pay extra attention to improve your personal loan eligibility qualifications that determine your repayment capacity, like EMI affordability and credit score, to receive an early sanction of the advance.
Though these parameters vary with different lenders, there are some standard criteria that they adhere to, like the city of residence, age and other factors. The final approval depends on the overall eligibility of an applicant by and large.
Tips to increase your eligibility for a personal loan
Individuals opt for personal loans to achieve their diverse financial goals, for example, meeting medical emergencies, making a high-end purchase, pursuing higher studies, and others. They thus need to hold a sound financial record to ensure they receive the funding required with ease.
Following are some essential tips to improve your loan eligibility that actually work.
- Apply with a high credit score – Possessing a low credit score can be a vital reason for personal loan application rejection. Since the credit score is a standard measure to assess one’s financial standing, lenders scrutinise this aspect with utmost importance. With this consideration, they try to assess if you are capable of repaying the loan within a stipulated tenor. Thus, it is advised to maintain and apply with a credit score of 750 or above for a fair chance at loan application approval.
- Pay your existing debts – One of the effective ways to improve your loan eligibility is to reduce your outstanding debt. If you already service multiple loans, getting another loan approved will be difficult as it reasonably increases the debt-to-income ratio, a measure of your fixed monthly liabilities as a percentage of your monthly income. A high ratio thus reduces your repayment capacity and lowers lender confidence in your ability to repay a new debt.
In this matter, an ideal debt-to-income ratio is not more than 50%. Moreover, if you are aware of how to use a personal loan calculator; it will be easier for you to apply for an advance that suits your repayment capacity.
- Incorporate all sources of income – No matter which lender one chooses, they will check personal loan eligibility based on his/her financial capacity to repay the loan. Thus, it will be safe for borrowers to display all their sources of income alongside their salary. It will help create an impression with the lender that such an applicant is capable of repaying the loan amount affordably.
- Choose a lender with minimum eligibility criteria – Several lenders offer a personal loan in India, and selecting the right one often becomes challenging. Nonetheless, you need to do your research and settle for the one that requires minimum eligibility criteria for improved loan accessibility.
In this regard, financial institutions like Bajaj Finserv offer personal loans with minimum eligibility and documents alongside flexible tenor.
They have also introduced pre-approved offers to make loan processing convenient and time-saving. Such an offer is available on several financial products, like personal loans, business loans, and credit cards. You can check your pre-approved offer by merely entering your name and phone number.
Also, gathering information regarding the reasons for personal loan rejection and how to avoid them can prove to be beneficial on the borrowers’ front. Combined with the necessary steps to improve your loan eligibility, these initiatives improve the chances of online personal loan approval.
5 Things to Consider Before Applying for a Online Personal Loan
In today’s time, you don’t need to rely on your savings or salary to fund entire wishes and fulfil the needs. If you are a salaried individual who is earning a decent salary with a stable employment and repayment history can apply for a personal loan.
A personal loan is to help people cover and manage all personal needs. As a result, you can get the personal loan up to Rs.25 lakh without waiting for ages.
Most of the leading lenders are willing to approve your loan application within 5 minutes. It is when you have the required personal loan eligibility. As a result, you can get the loan amount within 24 hours into your bank account.
However, before you get to know how to apply for a personal loan, you should consider some elements beforehand. Going through the same will help you enhance personal loan eligibility as well. Read on this quick article and dig deeper!
Consider these points before applying for a personal loan
Your CIBIL Score
When you apply for a personal loan, the first thing that the lender will check is your CIBIL Score. They do that to determine your creditworthiness for a loan amount at particular personal loan interest rates. If you have managed it well by repaying all existing debts and credit card outstanding on time, you will get the approval easily. A Credit Score ranging 700-750 or higher is what is considered a great score. If you don’t have a robust CIBIL Score, you can improve it by paying all your debts and EMIs on time and by the default date.
Is it a need or greed?
Some people apply for a personal loan just for the sake of it to shop for their desires which are not needed. They continue doing that without worries and one day, need to pay higher EMIs. On the other hand, some people apply for a personal loan to cover their basic needs which their salaries and savings can’t accomplish. Hence, you should check the intention of applying for a personal loan is for need or greed!
The overall cost of the loan
A personal loan applicant also needs to consider the total cost of the loan that it will incur on their pockets. You should also consider the interest rate charges and additional fees. If you think the requirement for the loan is not worth the total cost, it may not be a smart move to apply for a personal loan as of now.
You should also check out the total penalty that you will need to cough up if you are unable to pay your dues or EMIs on time. It is because if you don’t pay an EMI on time, lenders generally charge a heavy penalty on the loan account. Hence, it becomes a must to know all the precise details of the penalty changes. It is vital to check as you would like to check the affordability factor before applying for it.
Look for the best deals
Another thing worth considering is not settling for the first personal loan approval from a lender. It is as you may opt for a lower rate if you compare all deals. To do that, you can go to a third-party website and compare all available personal loan deals on a single page. This way, you would be able to opt for a deal that best matches your needs, and repayment capacity.
Some of the best aspects that you should consider before applying for a personal loan in India are discussed. Going through them should have given you a fir idea how to apply for a personal loan and considering what to get the best deals.
Bajaj Finserv comes with pre-approved offers on personal loans, home loans, and loans for business, loan against property, credit cards and other products.
You can share your basic details such as your name and mobile number to unlock your pre-approved loan offers today.