Personal loans are a saviour in dire times or help you extinguish an emergency or meet your personal needs too. However, to avail of a personal loan, you need to check your personal loan eligibility. A personal loan eligibility is a list of criteria you need to meet to avail a personal loan.
A personal loan is a type of unsecured loan, so there is no requirement for you to hold any of your assets as a collateral, or there is no restriction on what you can spend the money on. You can get a loan amount of about Rs. 10 lakhs via financial institutions, and the rate of interest is very flexible along with the tenure that stretches for about 5 years in order to provide you with a good opportunity to repay the loan in a stress-free manner. The higher your salary is, the higher amount you can avail for a personal loan.
In order to be eligible, you need to meet the following 5 criteria:
- Employment status: If you want your personal loan eligibility to be affirmative, then you need to be employed for more than 6 months and have an employment history of more than 3 months in your current organisation. This personal loan eligibility factor determines your stability. A self-employed individual or a business owner is not eligible for a personal loan.
- Salary criteria: If you reside in a tier 1 city, then you need to make more than Rs. 20,000 per month to meet this personal loan eligibility criterion. If you reside in a tier 2 city, then you need to make more than Rs. 15,000 per month to meet this personal loan eligibility criterion.
- Credit score: Credit score, usually CIBIL score, is used in India. A credit score represents your ability to pay off the personal loans you take. Suppose you are an individual with a CIBIL score of more than 750. In that case, you definitely meet the personal loan eligibility criteria and are in a position to get better loan deals in the future too.
- Age criteria: You need to be of age 25 and above in order to apply for a personal loan. The upper age limit for the same is 45 years of age. This age limit, especially the lower limit, determines your level of maturity and allows the banks & financial institutions to take the risk with you when it comes to providing you the loans that you need.
- Disposable income & EMI as a proportion of your income: The personal loan eligibility criteria heavily depend on your income. It should fall within a range of 30 to 40% of your net monthly income. It should not be more than that. The EMI you would be paying on the borrowed personal loan should not be more than 65% of your income. Otherwise, it can create an issue about smooth repayment in times of other crises.