A personal loan is an unsecured loan, a borrower does not have to keep any of their assets as collateral. A personal loan comes handy at the times when an emergency appears and an individual is short of money. This loan can be used for a medical emergency, to meet the wedding expenses, plan a vacation abroad and much more. There are more than 100 banks and non-banking financial corporations who provide personal loans to needy people. Before approving the loan, the lender checks several aspects like CIBIL score, age of a borrower, debt-to-income ratio, income of the applicant and much more.
What is the eligibility criteria for a personal loan?
Eligibility criteria for all the lenders are different but the general requirements are:-
Eligibility criteria for salaried individuals like an individual working at an MNC, lawyer, doctor, defence personnel etc.
|The income of an individual||Rs 15,000|
|Minimum work experience||1-3 years|
|Work experience with the current organisation||6 months|
|Credit score||750 and above|
Eligibility criteria for a self-employed person, people who have their own business:-
|The income of an individual||Rs 15 lakh annually|
|Minimum work experience||2-5 years|
|Work experience with the current organisation||3 years in the current business|
|Credit score||750 and above|
To avoid rejection of a loan, a borrower must improve their eligibility first if they want to their loan to be approved instantly. Here are the five tips which will help you get a personal loan instantly:-
1. Maintain a credit score
Credit score plays an important role in a personal loan, if a borrower has a low credit score then the loan is usually rejected. A credit score is a number which ranges between 400-900 and it shows the creditworthiness of a borrower. If a borrower has credit score 800 which means that the credit history a borrower is good, he/she has been paying all their balances on time. However, if the score is less than 600 then it is considered that the borrower is a high-risk applicant and he may not be able to may the payments on time. This leads either to rejection or the loan is offered at a higher rate of interest.
2. Pay the bills on time
One information which will definitely improve borrowers personal loan’s eligibility is to pay all the loan EMIs and credit card bills on time. It is advised to reduce the credit usage before applying for a personal loan. More credit cards or loans means that the borrower does not have a good income, the reason why he/she borrows money from lenders. Lower-income means that a borrower can default on the loan. Lenders also check the debt-income-ratio, it is a monthly debt payment divided by the gross income. A ratio of 15 percent is considered appropriate if the ratio is more than that then lender might reject the loan.
3. Include the added source of income
Borrowers source of income is the important criteria which are assessed by the lender. Income is the factor which helps a lender decide whether a borrower will be able to repay the loan amount on time. If a borrower does not fulfil the income eligibility criteria then one should look for another source of income, for example, a borrower can do a part-time job or freelancing work to fall in the income eligibility criteria.
4. Don’t apply for multiple loans
Every time a borrower makes an inquiry for any time of the loan, the lender makes a hard inquiry in a borrowers credit report. The hard inquiry substantially lower down the credit score of a borrower. If a borrower makes inquiry 2-3 times then it is not considered as the hard inquiry but if the inquiries are more than that it will definitely affect the credit score. So, it is best not to make several inquiries for a loan.
5. Go with a lender who has simple eligibility criteria
To increase the chances of loan approval then a borrower must go with a lender who has minimum personal loan eligibility criteria. There are lenders like Bajaj FInserv, Axis bank, HDFC Bank and Tata Capital who have the minimum eligibility criteria to meet to avail personal loan.
Bottom line: So, these points will surely help a borrower improve the eligibility for a personal loan. Lastly, also read the terms and conditions of a personal loan clearly before applying for a personal loan.