Top 5 Factors That Affect Your Personal Loan Eligibility In 2022
Despite your best efforts, do you lack the funds to fulfil your obligations?
Are you wondering what factors affect your loan eligibility?
In case the above questions resonate with you, learn how you can check personal loan eligibility, the documents required for a personal loan, and updated information regarding personal loans.
Let’s get started!
A personal loan is the best way to meet financial liabilities. These are unsecured loans and are sanctioned quickly.
Significant reasons for which you can avail personal loan are
- Medical bills
- Home Renovation
- Wedding expenses
- Personal durable goods
- Travel expenses
- Unpaid loans
5 Factors That Affect Your Personal Loan Eligibility In 2022
You can increase your chances of getting the best interest rates, higher loan amounts, and low processing fees. Various factors govern the eligibility for personal loans.
The top 5 factors are:
- Credit Score: It shows your previous repayment track record. Your credit score should be good, 700 or above.
- Work Experience: Stability, organization, and designation contribute toward low-interest rates.
- Salaried- Must employ in current company for at least 6/12 months.
- Self-Employed- Business tenure of at least continuous 3 years, ITR of last 3 years.
- Age: Minimum age is 21 years, and the maximum is 60 years. At the time of maturity, the age should not exceed 65 years.
- Income: Earnings define your ability to repay. Minimum monthly payment – Rs 15000- Rs 20,000.
- Repayment: With the help of a calculator, the repayment period will be reflected depending on other factors.
Documents Required for Personal Loan
The procedure for applying personal loan is very simple. Nowadays, you can apply offline as well as online.
Basic documents which are required for both salaried and self-employed are mentioned below:
Salaried
- Identity proof (Passport / Voter ID / Driving license / Aadhaar)
- Address proof (Passport / Voter ID / Driving license / Aadhaar)
- Bank account statement of last 3 months (Passbook of last 6 months)
- Two latest salary slips/current with the latest Form 16.
Self Employed
- Balance sheet and P&L account, last 2 years’ income computation
- Business proof (License, GST number, registration certificate)
- Last two years IT returns
- Clearance Certificate or IT Assessment
- Income Tax Challans or TDS Certificate
How you can check Personal Loan Eligibility?
You can check personal loan eligibility with the help of an eligibility calculator. There is no need to visit any branch or office, simply you can check it online.
A few details are required to be filled in the calculator:
- Date of birth
- City of residence
- Monthly income
- Employer
- Monthly expenses
After filling in all the required details, the calculator will show the amount for which you are eligible.
Why Personal loan is the best choice?
A personal loan has many advantages and features. Here is the list:
- Quick and convenient
- Minimum documentation
- Minimal charges
- Online account management
- Fast approval
- Flexibility in tenure
- 100% transparency
- Loan amount credited in 24 hours
- The facility of Flexi loan
- Maximum loan up to 35 lakhs
- No collateral required
- Repayment schedule predictable
Interest Rate & Charges
The interest rate is the cost a lender charges the borrower for borrowing money. An interest rate determines the amount, which is a percentage of the principal.
Personal loans are subject to the following charges:
- Interest Rate- For Salaried, the range is 11% to 21%
- Processing Fees- Up to Rs. 4999/-
- Stamp Duty and other Statutory Charges- As per State
There are many factors based on which interest rate is calculated. These factors are:
- History of repayment
- Principal amount
- CIBIL score
If you want to reduce the interest rate, there are various ways that you can take note of. You can also avail of the option of a Balance transfer. In balance transfer, you can transfer your running loan to any other lender.
They will provide you with a less rate as compared to the running interest rate of your personal loan.
There are two types of Interest rates:
- Flat Interest Rate-
In a flat Personal Loan Interest Rate, the interest rate is calculated based on the total amount of the loan.
- Reducing Interest Rate-
A reduced interest rate is a monthly interest rate calculated using the outstanding loan amount.
How Do You Get the Lowest Interest Rate on a Personal Loan?
The interest rate on a personal loan is higher than other loans as this is an unsecured loan. In a personal loan, you need not give any mortgage to a lending institution.
As compared to other loans, its sanctioning process is also fast.
There are a few tricks that you can keep in mind that will help you in availing of low-interest rates.
- Do not miss any EMI- Always try to pay EMIs on time. This directly affects your CIBIL score and track record. And whenever you apply for any fresh loan, the lender will always look for your record.
- Compare Interest Rate- Try to compare the best lending institutions in terms of rates, processing fees, etc.
- Negotiation with the lender- Ask for any discount in interest rates. You can even ask for any approvals required from their higher authority for low-interest rates.
- Better Credit score- Those who have higher credit scores will get a low-interest rate. The Credit score should be more than 750. If it is less, then you should improve it.
- Check Offers- Look for offers like festival offers, and annual offers for low-interest rates.
Wrapping Up
The purpose of this article is to provide you with a comprehensive understanding of the Top 5 Factors That Affects Your Personal Loan Eligibility In 2022.
Among all other loans, a personal loan is the easiest and most flexible loan. With the help of this, you can clear your previous debts, manage expenses and fulfil your liabilities.
To get more such information, do visit Piramal Finance. Furthermore, feel free to reach out to our team, and we would love to resolve all your doubts.