4 Crucial Things to Check Before You Apply for a Personal Loan

The introduction and availability of online processes has simplified the steps to apply for a personal loan today. You can simply visit the website of your lender to send your application and provide necessary documents for the loan processing to initiate. However, such approval comes by easy only if your borrowing profile matches the financial institution’s requirement. As personal loans are unsecured advances, lenders keep strict criteria for a borrower to meet, which enables them to qualify for a loan based on risk assessment. Thus, creditworthiness of the applicant is a crucial aspect that lenders check when assessing a personal loan application.

There are several other aspects that one must meet to be eligible for the advance and to receive fast approval. Make sure you go through all of them and rectify any hold-backs for improved chances of easy personal loan approval.

The Minimum and Maximum Age

Financial institutions lay down a set of personal loan eligibility requirements that one needs to meet when applying for the loan. These requirements allow the lender to assess whether the necessary factors in your borrowing profile clear the risk assessment, making you eligible for the borrowing.

Age is one of the crucial factors among these, with lenders setting the minimum and maximum age range that you must fall within to apply for a personal loan. While it mostly varies between 20 and 60 years, the set range allows the lender to assess the remaining working years of the applicant and the overall risk involved as per their following career years, enabling the selection of suitable loan terms.

Income As Per the City of Residence

Lending institutions also set minimum income limits for applicants to meet depending on the cities that they reside in. This requirements comes in line with the varying costs in different cities that differ the expenditure overall expenditure graph for the borrower.

In case the applicant does not fulfil the minimum threshold for income as per the city of residence, his/her application most likely receives rejection due to a high risk of repayment default or delay. It is thus best that you first check the lender’s minimum income requirement and apply accordingly. With reputed lenders, the minimum income threshold for different cities usually varies between Rs.15,000 and Rs.25,000 per month.

It is also advisable to provide all income documents supporting your application if you have other income sources apart from salary income, like rental income or investment profits. This uplifts your overall income, making you increasingly eligible for the advance.

Repayment Capacity Based on Total Borrowing

One crucial factor to not ignore when applying for a personal loan is your repayment capacity, which is a medley of multiple factors. Some aspects that determine your overall repayment capacity include the total borrowing you stand with, your net monthly income, fixed monthly liabilities, total credit utilisation, and the total repayment strain on your income. You must make sure to assess how much you should borrow only after considering these crucial factors. Take the help of a personal loan EMI calculator to assess your repayment capacity and decide on the loan amount accordingly.

Tenure Suitability

The tenure you select for loan repayment is significantly responsible for the monthly repayment strain on your budget. The total loan liability payable, including the loan principal and interest component, is divided into the total number of years, and included months thereof, to determine the EMIs payable on your personal loan. It is thus wise to select the tenure only after assessing the EMI value based on such selection. Do so with the help of an EMI calculator to choose a repayment tenure of up to 5 years before applying.

Your employment stability and past repayment records are other crucial factors you must also consider before you apply for a personal loan. Make sure to check the necessary eligibility requirements with the lender and see if you fulfil them before applying for easy approval.

Stay in Touch

To follow the best weight loss journeys, success stories and inspirational interviews with the industry's top coaches and specialists. Start changing your life today!

Related Articles