Life expenses are never-ending! From a wedding to a family vacation to your child’s education, it can sometimes be overwhelming. Taking a personal loan is the most ideal way to manage a host of emergency and miscellaneous expenditures. Before you finalize this idea, do take notice of the specifications of banks that provide personal loans. There are a few requirements that every bank would require you to fulfill to get your loan approved.
Read below the factors that affect your eligibility for a personal loan:
Your monthly income is an essential factor in all kinds of loans. They are usually supported by security or collateral in the case of secure loans like home loans, car loans, or gold loans. However, the same is not the case with a personal loan. Generally, the banks want to make sure that you have an adequate monthly income. It is crucial as this income is going to enable you to repay the loan on the stipulated time. Sometimes, the income requirements vary based on location. Banks take notice of the place you are living. It is usually higher in metro cities as the cost of living in these cities is high.
Another essential factor is the credit score. It is a three-digit number based on your credit history. Simply put, this score enables banks to understand how diligent you have been with credit like loans and credit card bills in the past. Usually, banks rely on credit scores that range between 300 and 900. Keep in mind that the higher this score is, the better your chances of getting the personal loan approved. If in case your credit score is not sufficient, you should first try and improve it before applying for a personal loan.
One thing that strengthens your case for the approval of your personal loan is your age. This number helps banks ensure that you have an adequate number of working years remaining. In most cases, banks prefer salaried applicants. And generally, those who are between the age group of 23 and 58 years.
Most of the banks prefer self-employed professionals who are between the age group of 28 and 65 years. This group’s upper age limit is higher as self-employed people can continue working even after the standard retirement age.
If you have more work experience, banks will consider you to have a more financially secure future. On the other hand, if you have recently started to work, it can affect your eligibility for securing a personal loan. The minimum work experiences vary from bank to bank, your occupation, and other factors.
Moreover, listed below are the requirements for work experiences which are generally considered by most of the banks:
- Salaried Professionals: Work experience of two years and a minimum of one year experience in the current company.
- Business Owners: Require work experience of at least five years in the current business.
- Self-employed Professionals: A minimum of three years of work experience.
Lastly, but most importantly, the factor that affects your personal loan eligibility is your current liabilities. In the event where you are already repaying an existing loan like a home loan or education loan, the bank would require its detailed information. Apart from this, the bank would want to make sure that you have adequate income to repay your existing liabilities. Also, the bank would ensure that you have the capability to re-pay the new personal loan you plan to take.
After considering all the factors mentioned above, you can go on the internet and research the different banks and the offered personal loans. And you can also use the personal loan EMI calculator on their websites to compare different banks. You can opt for reputable banks like Axis Bank, which ensures that you get help whenever required with their impeccable customer service. It would help if you check the policy wordings carefully and ensure your eligibility for the personal loan.