Personal Loan Eligibility
A personal loan is the most selling products by banks nowadays. Besides that, there is some other non-banking financial organization too that provides you with a personal loan. You can use this amount of loan for your personal purposes. One more thing to note is that there is no need for collateral in a personal loan. There is no need to pledge anything to the bank. This loan is totally based on your source of income and your credit history.
Features of Personal Loan
A personal loan comes under unsecured loans that applicants can use for various reasons, including vacation or travel, higher education, wedding, medical treatment, credit card payment, and so on. Some fundamental characteristics are as follows:
- No Security Needed: Because a personal loan is unsecured, you are not required to provide any security in the form of shares, cash, or any other asset.
- Loan Term: Customers can obtain a personal loan for a period ranging from one month to 72 months.
- Personal Loan Interest Rates: They begin at 10.25 per cent. Besides interest rates, borrowers must also pay processing fees, prepayment and foreclosure penalties, and other costs when taking out a personal loan.
- Loan Amount: Depending on your income eligibility and credit score, you may be eligible for a personal loan ranging from 5,000 to 75 Lakh.
- Special Plans: Banks also provide customised personal loan interest rates and schemes for pensioners, salaried borrowers working in government, defence, private, or multinational corporations, and self-employed professionals such as doctors, CAs, CSs, and architects.
Personal Loan Eligibility Criteria
Every bank has its own personal loan eligibility criteria to give a personal loan to the applicant. But in general, there are some common eligibility criteria in every bank and non-banking financial company. Let us discuss Personal Loan Eligibility in detail.
Age is the basic criterion for Personal Loan Eligibility. None of the banking or non-banking organization company gives a loan to any minor. You will only get a personal loan only if your age is more than 21 years. After that, the bank wants to be assured that the applicant is capable of returning the loan or not. So it is obvious that if your age is less, you would not have enough money to return the loan.
To get a personal loan, you need to have some rigid source of income. You need to be salaried or self-employed with proof. Obviously, if you have some source of income, only then you would be able to return the personal loan. For this reason, the bank needs some income proof. If you are salaried, you need to have a salary slip for the last three months as proof of income. On the other hand, if you are self-employed, you need to have ITR (Income Tax Report) for three years. But it should be at least Rs. 2.5 Lakhs per year. Furthermore, the bank needs a bank statement for the last six months.
- CIBIL Score
CIBIL score is also one important factor that plays an important role in personal loan eligibility. You are eligible to get a personal loan only if your CIBIL score is good. If your CIBIL score is less than 620 will have a problem getting a personal loan. The thing is that your CIBIL score tells a lot of things about your credit history. If your banking is good, then your credit score would be good. After checking the credit score, the purpose of the bank is to check how punctual you are towards your banking.
These are the basic personal loan eligibility criteria that bank checks while giving you a personal loan.
My credit score is less than 750. Will I be able to obtain a personal loan?
There is no guarantee that any given credit score will be approved for a personal loan. However, if you have a score above 750, your chances of acceptance increase significantly. A score of slightly less than 750 does not necessarily imply that the lender will deny your request. The following are some possible outcomes of your loan application:
If your credit score ranges between 300 and 599, you will not be eligible for a personal loan. A low credit score indicates to lenders in this area that you do not have a track record of good credit behaviour. The vast majority of lenders will immediately reject your request.Calculate Your Loan EMI Here
Special Note: An individual must examine the whole EMI amount payable to the lender with the Personal loan EMI calculator.
FAQs about Personal Loan Eligibility
✅ What purpose does a credit report serve in the approval of a personal loan?
Because you do not provide any collateral for a personal loan to a bank/NBFC, the lender is in danger of losing money if you do not make your payments on time. Lenders may review your credit information report (CIR) or credit report to determine your credit history and monitor your loan repayment actions over time. This helps them understand your credit discipline and decide whether you are a high-risk or low-risk customer. A credit report that displays a clear record of timely repayments and overall responsible credit behaviour is essential for lenders when authorising a personal loan application.
✅ What is the minimum credit score required to be approved for a personal loan?
Before deciding whether to continue with the processing of your application, lenders typically look for a minimum credit score of 750. Because personal loans do not require collateral, lenders examine your credit history to determine whether they can rely on you to meet your debt obligations. A credit score of 750 indicates that the client has a strong track record of making timely repayments over a long period.
✅ What are the benefits of a personal loan?
Personal loan benefits are that you are reasonably easy (because you don’t need as much paperwork as your house or your car loan), you can spend your money without a limit; personal loans are not guaranteed. So, if you don’t have any assets to put up as collateral, such as a house, stocks, or gold, and are in desperate need of funds, this may be the most convenient option.
Table of Contents
- 1 Personal Loan Eligibility
- 2 Features of Personal Loan
- 3 Personal Loan Eligibility Criteria
- 4 FAQs about Personal Loan Eligibility