It is a wide approved fact among customers that personal loan is one of the most popular loan options. Despite its higher interest rates as compared to unsecured loans, customers like to choose a personal loan as they don’t have to put any collateral against the loan amount. But one of the important and often asked questions by the borrowers is — What is their personal loan eligibility? Simply put – How much money can an Individual get through a personal loan from a lender? Every individual wants to have an estimate about the personal loan amount that they will get so that they can decide if it is a suitable option for them or not.
Personal Loan Eligibility is one of those factors that tends to change from one lender to another and for one individual to another individual based on several factors. These factors determine how much money an individual can get and affect your personal loan eligibility at large. Some of these factors are Monthly Income, Employment Type, Residing City, Job History, Credit Score, etc. In this article, we will discuss these factors in detail so that you can understand better about your eligibility. So, let’s get to it.
Personal Loan Eligibility Deciding Factors that a Customer should Know
As we told you earlier about some of those factors that define your eligibility. Now it’s time to know them in detail.
Personal Loan needs to be repaid within a fixed tenure upto a maximum of 5 years. So, a lender wants to make sure that a borrower timely repays the loan. To ensure this, lenders check the monthly income of individuals as the repayment will be done from this amount only. Suppose an individual has a higher income with zero obligations (Other Loan and Credit Card EMIs), he or she would be able to get a higher loan amount as compared to an individual with lower income with several existing obligations.
Employment Type and Stability
Personal loan Eligibility also depends hugely on the employment type of an individual. Salaried employees have usually more chances to get a personal loan as compared to self-employed individuals. The reason: Salaried employees get their income regularly on a fixed date while self-employed people may see ups and downs in their respective businesses. Other than this, lenders will also check the stability of your job. Suppose an individual has shifted multiple jobs in a short duration, he or she may not be eligible to get a personal loan.
For some lenders, Personal Loan Eligibility also tends to change according to the city in which the borrower is living. The eligibility criteria for people living in a metro City is quite strict as compared to people living in a non-metro city. The monthly income criteria also changes from one city to another city. So, this factor is also one of the crucial ones.
Coming to the most important factor that affects your personal loan eligibility — Credit score, which is a 3- digit number ranging from 300 to 900 and tells about an individual’s creditworthiness. Higher the credit score, higher will be the loan amount as lenders are more likely to trust on a person who has a brilliant repayment behavior and responsible with debts as compared to individuals with poor scores (below 650).
Job History and Reputation of Company
Lenders also demand that a salaried individual must be working for a definite year. This criteria changes from one lender to another. For example HDFC personal loan eligibility asks borrowers to have an overall work experience of minimum of 2 years in which the last year should be with the present company. People working in a MNC or some other reputed company do have. Such individuals will have more chances to get a higher personal loan amount as compared to people working in a non- listed company.