Personal loans like any other loans are offered at an interest rate that is majorly dependent on the income profile of the applicant. Having said that, unlike other loans, a personal loan is generally unsecured and the lender does not have any authority on the usage of the money. As you know, there is an eligibility criterion on the basis of which a borrower gets a loan, different lenders have different criteria for this unsecured loan as well. However, there are also some factors that affect the eligibility of a personal loan and these factors are as follows:
Factors Affecting Personal Loan Eligibility–
It is important to understand that there are some factors on the basis of which you get a personal loan and these factors are as follows:
Monthly Income: A regular and good source of income if one of the most important factors in the loan amount that a borrower can get from the banks or NBFCs. So, the more you earn the lower rate you will be offered.
Age: The age criteria for a loan borrower is between the age of 21-58 years. However, some lenders have the upper limit of 65 years as well. The reason behind this is that young people are generally free from financial responsibilities as such and thus the repayment is expected to be smoother in this case.
Monthly Expenses: To get a personal loan, monthly expenses like investments and other responsibilities of the borrower are considered by the banks. In the case of personal loans, is generally expected that the applicant must have a smooth saving of more than 50% of his/her monthly salary after meeting all the monthly expenses.
Any Other Loan: Banks often find it easier to lend money to the borrower’s who have no other running loan. Thus, if you have any other loan, lenders will take into account the remaining income you have after the deduction of the other EMIs. However, if you are not having any other loan, the path is going to be smoother.
Credit History: The credit history of the applicant is most importantly taken care of as CIBIL score play a very important role in getting a personal loan. It is important to understand that credit history defines your performance during the repayment procedure and the loan application of a defaulter is not easily accepted by the banks.
Job Stability: A person who has good working experience with a minimum of 2-3 years can get a hassle-free loan. Thus, if you are a stable employee of your current employer, lenders will find it easier to trust you and hence approve your application.
Relationship with the Bank: Maintaining a healthy relationship with the banks/NBFCs is very important to get a personal loan smoothly. People who are are an existing customer of the particular bank they are applying at, have a greater chance of getting low-interest personal loans.
Category of Your Employer: If the borrower is working in an MNC or the employer comes under fortune 100 companies, the loan eligibility increases as the loan repayment capacity also increases. Banks and NBFCs have specialized personal loans for MNCs and other reputed firms and the present lowest interest rate on a personal loan is 11.29% offered by Kotak Mahindra Bank.
Now, the person who matches the above-mentioned factors will be eligible for this type of loan. Other than this, there is a certain personal loan eligibility criterion also that is required to match with the applicant’s profile. This eligibility is, however, subject to change from profession to profession, from one applicant to another, and from one lender to another as well. For the basic idea, here is the general required criteria:
- The applicant must be above 58 years
- Minimum Net Monthly Income of the applicant should be ₹15,000/-.
- Good score
- Minimum work experience of the applicant should be 1 year
- The age of the applicant should be between 24-65 years
- Net Monthly Income of the applicant should be ₹2 lakhs
- The applicant must have a minimum work experience of 3 years
- Good cibil score
Personal Loan Interest Rates in Top 5 banks
- ICICI Bank-11.59% p.a. onwards
- HDFC Bank-15.75% p.a. onwards
- Axis Bank-15.50% p.a. onwards
- State Bank of India- 11.90% p.a. onwards
- Kotak Mahindra Bank-11.29% p.a. onwards
Thus, you can decide which bank is giving your lowest rate and then apply for the one that suits your purpose. It is also advised to be true to your needs as well as affordability for a smoother loan.