Personal Loan Eligibility: What You Need To Know?

Personal Loan Eligibility

Personal Loan Eligibility

Are you looking for a home extension? Or Want to travel the world with your loved ones? or Need to meet an emergency? Require money to start a business? Or looking forward to paying off your existing debts? No matter what the reason is, a Personal Loan is a feasible solution that can fulfill the immediate cash crunch that too with ease and ultimate convenience. In recent times, personal loans are the most convenient financing tool, the quick approval and disbursal make it unique from other options. Also, loans can be used for any purpose without any explanation. But before you apply for a loan, it’s essential to check personal loan eligibility and the documents required. This will help you get your loan approved instantly if you meet all the required criteria.

If you are a responsible borrower, then be with this write-up till the end  and gain a detailed knowledge of personal loan eligibility criteria and much more.

First of all, a personal loan is an unsecured loan that can be used to meet a variety of needs which means there is no need to provide collateral or security. You can avail of a loan from any bank or non-banking financial institution. At Buddy Loan, you can obtain a loan up to Rs. 15 Lakh for tenures ranging from 12 months to 5 years starting at an interest rate of 11.99% p.a.

If you are someone who is looking for a personal loan, you must start learning about the money you can borrow and interest to make the overall loan journey experience hassle-free and seamless. For this, you can use a personal loan eligibility calculator that soothes your borrowing procedure. It is a tool that helps you determine whether you are eligible for a personal loan or not. Depending on your monthly income, current EMIs, employment type, working experience, and creditworthiness – It calculates the maximum loan amount you are eligible for, interest rate, and repayment tenure.

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Why Do You Need To Check Your Personal Loan Eligibility?

Although availing of a personal loan is easy, it is essential to check your eligibility before applying for one. And if you meet all the criteria, you can enjoy the benefits of a personal loan to the fullest.

Here are a few reasons why need to check your personal loan eligibility before  applying for a personal loan:

Quick Processing and Fast Disbursal:

The application for a personal loan can be submitted online with a single click and get sanctioned within hours. Most lenders will process your loan within a few hours and your loan amount will be disbursed instantly after verification. This helps you to take care of any financial emergency.

No Restriction on End-Use:

This is one of the best advantages of getting personal loans. Unlike other loans where the purpose or usage is predetermined, personal loans give you the freedom to utilize them for any purpose. This allows borrowers to use personal loans for any need, be it a dream wedding, a long-awaited vacation, an upskilling course, or a recliner lounge set for the living room.

Very Less Documentation:

Personal loans are approved based on your credit score and income. Therefore, lenders ask only for minimum documentation for verification. Furthermore, if you are already a customer of the bank, you can quickly get a personal loan with no documentation.

Repayment Tenure:

Personal loans can either be short-term or long-term. You can get a flexible loan repayment tenure starting from 12 months up to 60 months. This helps you in sufficiently planning your monthly budget and expenses.

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Nil Collateral:

Since personal loans are unsecured, you need not provide any collateral or guarantee when availing.

Transparent Loan Process:

The loan application process for a personal loan is highly transparent. The processing fees and other charges are mentioned beforehand for you to decide. Moreover, many lenders also provide online access to your personal loan account so that you can keep track of your loan status anytime anywhere.

How to Check Personal Loan Eligibility?

Now, that you are aware of the benefits you receive while applying for a personal loan and also why you might need one, let’s dive into personal loan eligibility checking. You can use a Personal Loan Eligibility Calculator to check whether you are eligible to apply for a loan. Many lenders have this eligibility calculator on their official website to make it convenient for borrowers.

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Here is How You Can Check The Personal Loan Eligibility For Salaried Person:

  • Your Name
  • Monthly Net Income
  • Total years of work experience
  • Your age
  • Your existing EMIs
  • Required repayment tenure

Based on the details you enter, the calculator will evaluate your eligible personal loan amount. This tool will also help you to calculate personal loan eligibility to determine your eligibility beforehand so that you will have a clear picture of your expenses and you can set a budget.

Personal Loan Eligibility Check

The majority of the lenders check the following parameters to gauge if you can repay the loan. Here are four basic eligibility requirements that you need to meet to avail of a personal loan –

  • You need to be an Indian citizen.
  • Your age must fall in the range of 21-65 years. Even few lenders offer loans at the age of 23 years.
  • You must have a total work experience of 1 year while some lenders expect more work experience.
  • Your credit score should be more than 750 to avail of a loan. Not having a good credit score can reject your loan application. In this case, you can add a co-applicant to increase the chances of loan approval.

With minimum and easy-to-meet eligibility criteria, you can apply for a personal loan in just a few clicks through Buddy Loan.

Documents Required for Personal Loan

Submit the required documents for verification and instant approval of your personal loan. Here are the basic documents that the majority of the lenders want you to submit:

  • PAN Card/Voter Id/Aadhar Card for identity proof
  • Address Proof
  • Last 3 months’ salary slip
  • Last 6 months’ bank statement

Once you submit the online application along with the documents, it will go for verification. After the approval process, the loan amount will go straight to your account within 48 working hours.

Personal Loan

Personal Loan Eligibility Criteria From Top Banks in India

State Bank of India (SBI) Personal Loans Eligibility

Interest rate Starting from 10.90% per annum
Loan Amount Up to Rs. 20 Lakhs
Income Eligibility Rs. 15,000 per month
Age Eligibility Minimum of 21 years, and up to 58 years at the time of loan maturity
Repayment Tenure Up to 72 months

ICICI Bank Personal Loans Eligibility

Loan Amount Rs. 50,000 – Rs. 25 Lakhs
Interest Rate 11.50% to 17.25% p.a.
Repayment Tenure 12 months – 60 months
Loan Processing Charges From Rs. 999/- Up to 2.0% of the loan amount and applicable Service Tax
Prepayment Charges 5% on principal outstanding + GST

HDFC Bank Personal Loans Eligibility

Interest rate Starting from 10.50% to 21.00% p.a
Loan Amount Up to Rs. 40 Lakhs
Income Eligibility Rs. 25,000 per month for HDFC Bank Salary Account Holders

Rs. 50,000 per month for non-HDFC Bank Salary Account holders

Age Eligibility Minimum of 21 years and up to 60 years
Repayment Tenure Up to 60 months
Credit Score Minimum 650
Employment Type
  • Employees of private limited companies
  • Employees of public sector undertakings, including central, state and local bodies.
Employment Continuity At least 2 years, minimum 1 year with the current employer

Axis Bank Personal Loans Eligibility

Interest rate Starting from 12% – 21% p.a
Loan Amount Up to Rs. 15 Lakhs
Income Eligibility Rs. 15,000 per month
Age Eligibility Minimum of 21 years and up to 60 years
Repayment Tenure Up to 60 months

Note: The interest rates of banks are subject to change, so do visit their official website to get their updated rates.

Personal Loan Eligibility From Top NBFCs and Other Banks

Lenders Eligible Loan Amount Minimum Eligible Income Eligible Age  
PaySense Up to ₹5 lakh ₹18,000 per month 21 to 60 years Apply Now
Bajaj Finserv Up to Rs. 25 Lakh Rs. 25,000 per month 23 to 55 Years Apply Now
Aditya Birla Capital Up to ₹15 lakh ₹15,000 per month 23 to 60 years Apply Now
Fullerton India Up to Rs. 40 Lakh Rs. 20,000 per month 21 – 60 Years Apply Now
Tata Capital Rs. 75,000 to Rs. 25 Lakh Rs. 15,000 per month 22 to 58 Years Apply Now
Money View Rs. 10,000 to Rs. 5 Lakh Rs. 13,500 per month Above 18 Years Apply Now
IIFL Up to Rs. 25 Lakh Rs. 35,000 per month 25 to 60 Years Apply Now
Bank of Maharashtra Up to Rs. 10 Lakhs Rs. 3 lakh per annum 21 to 60 Years Apply Now
Canara Bank Up to Rs. 5 Lakh On a case by case basis Above 18 Years Apply Now
IDFC First Bank Rs 1 Lakh to Rs 25 Lakh Rs. 20,000 per month 23 to 58 Years Apply Now
IDBI Bank Rs. 50,000 – Rs. 10 Lakhs Rs. 25,000 per month 21 to 60 Years Apply Now
Indiabulls Rs. 1,000 to Rs. 15 Lakh Rs. 25,000 per month Above 18 Years Apply Now
Indian Overseas Bank Up to Rs. 5 Lakh Over Rs. 5,000 per month Up to 60 Years Apply Now
IndusInd Bank Rs. 50,000 to Rs. 15 Lakh Rs. 25,000 per month (net) 21 to 60 Years Apply Now
Kotak Mahindra Bank Rs. 50,000 to Rs. 15 Lakh Rs. 20,000 per month (net) 21 to 58 Years Apply Now
Punjab National Bank Rs. 50,000 to Rs. 10 Lakh Rs. 10,000 per month Above 18 Years Apply Now
RBL Bank Rs.1 Lakh to Rs. 20 Lakh Rs. 20,000 per month 25 to 60 Years Apply Now
Standard Chartered Bank Rs.1 Lakh to Rs. 30 Lakh Over Rs. 22,000 per month 21 to 60 Years Apply Now
Union Bank of India Up to 10 Lakh Rs. 15,000 per month Above 18 Years Apply Now
YES Bank Rs 1 Lakh to Rs 40 Lakh On a case by case basis 22 to 58 Years Apply Now

Note: The interest rates of banks are subject to change, so do visit their official website to get their updated rates.

From the above table, if you meet the required eligibility criteria, you can apply for a personal loan based on your needs.

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How Do Lenders Evaluate the Personal Loan Amount You Are Eligible for?

Lenders usually determine your eligible personal loan amount by your ability to repay the loan. Here are two methods that lenders use to evaluate the maximum amount of personal loan that you are eligible for:

  1. Fixed Income to Obligation Ratio (FOIR) Method:

    In this approach, the lenders will consider your cumulative monthly payments required to repay current debt. If your FOUR reaches 50% of your take-home pay, the personal loan application will not be approved, or the loan amount sanctioned may be less than what you require.

  2. Net Monthly Income Method:

    Here lenders use a multiplier based on your net monthly income (NMI) to evaluate the maximum loan amount. The loan amount that is available can be up to 30 times your Net Monthly Income (NMI). If the loan amount requested reaches this limit, your loan application will not be eligible for a personal loan.

Eligibility

What Are The Factors Affecting Personal Loan Eligibility?

Credit score: Borrowers with a credit score of 750 and above are considered to be more financially responsible and hence, are less likely to default. Hence, banks and NBFCs prefer to offer personal loans to such applicants. Many lenders also offer comparatively lower interest rates for applicants having high credit scores. However, if you have low credit scores, lenders will charge you high-interest rates. Therefore, you must check your credit scores at regular intervals and take steps to maintain above 750.

If you are new to the credit market and want to increase your credit score, you can do so by availing a personal loan using Buddy Loan. To know how you can build a credit score using a personal loan, click here.

Note that the eligible credit score required for a personal loan may differ from one lender to another. Some lenders offer personal loans to those who are new to credit (applicants having no credit score).

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Employment Type and Employer Reputation:

Lenders usually prefer to offer personal loans for salaried individuals as they have a stable income compared to self-employed. Moreover, if you are working in a government or reputed corporates/MNCs. you are more likely to get a loan at lower interest rates. For many lenders, salaried individuals must have at least 1 year of work experience to be eligible for a personal loan. In the case of self-employed individuals, their business should be in existence for at least 2 years.

Age:

The majority of banks and NBFCs offer personal loans to individuals in the age group of 18 years to 65 years.

Minimum Income:

Having a high income indicates that you have a higher capacity to repay your loan on time, which further implies that you are a low-risk borrower. For salaried individuals, the minimum salary required is Rs. 15,000 or above. In the case of self-employed individuals, your gross annual income must be above Rs. 2 lakh.

Repayment Capacity:

Banks and NBFCs usually approve your personal loans when the EMI/NMI ratio is not more than 50% to 55%, which may vary across lenders. This means that your total credit card, existing loan EMI obligations, and proposed loan, must not exceed 50% of your total income.

Now that you know the factors that affect your personal loan eligibility, let us now have a look at how you can improve the parameters of loan eligibility to increase the chances of getting a loan approved.

Also Read: How to Get a Personal Loan: A Complete Guide on Eligibility and Documents

How To Improve Personal Loan Eligibility Parameters?

Meeting all the required eligibility criteria is essential to have a smooth process when availing of a personal loan. And if you fail to meet any criteria, your loan application may get rejected which will further affect your credibility. Here are a few tips to enhance your eligibility for a personal loan:

Credit Score

Your credit score plays a vital role in approving your loan application. A healthy score ensures quick approval while a poor score can lead your application toward rejection. The score is generated based on your previous loan journey, transaction details, and other credit factors. It is a 3-digit number and a score above 750 assures speedy approval. This score enables the lender to decide the loan amount and interest rate. So, make sure you maintain this score throughout the year by paying your bills on time. Remember, a good credit score determines your creditworthiness. Also, don’t forget to check your credit report before applying. A single error can reject your application. If you find any information that is wrong as knowledge, then fix it quickly.

Also Read 7 Myths About Credit Score Report That Need To Be Cleared

Make Sure You Have a Proper source of Income

Before applying for a personal loan, make sure you have a steady job and an income to avail of the loan with ease. Higher the income, the greater the borrowing capacity. Having a good income lets you negotiate the interest rate and repayment tenure. This is an important factor to consider, so be careful with your job and work experience.

Do Not Go For Multiple Loans/Lenders

You should apply for only one personal loan at a time. When you apply to too many lenders and apply, each inquiry is mentioned in the credit report and it affects your credit score negatively. Also, this will express your financial instability and lenders may reject your loan application. Before you approach a lender, do your research and compare loan offers, interest, tenure, etc. You must select a lender who will cater to all your financial requirements in a convenient way.

Keep All Your Documents Ready

Make sure all your documents are ready and in place. Before final submission, cross-check your application form, and credit score, and make sure all the criteria are matching with lenders’ requirements. You can add a co-applicant to enhance the approval chance.

A personal loan gives you financial freedom and keeps away all the stresses. Just follow the above tips and work on improving your personal loan eligibility factors to increase the chances of loan approval. The eligibility may vary depending on the personal loan types, so check with the lenders once before proceeding!

Get a Co-Applicant:

You can improve your personal loan eligibility by getting a co-applicant. They can be your family member, such as spouses, parents, children, etc. And when you apply for a personal loan with a co-applicant, the lenders will check the credit scores and repayment capacity of both applicants. Hence, get a co-applicant who has a high credit score to increase your chances of getting your loan approved.

Avoid Frequent Job Changes:

Lenders will also consider your employment history and stability when evaluating your personal loan eligibility. They may hesitate to offer you personal loans if you change your jobs frequently. The reason is that it reflects career instability, which further increases the credit risk for the lenders. Therefore, try to avoid job hopping, especially when you are planning to avail of a personal loan in the near future.

Avoid Multiple Loan Applications:

When you apply for a personal loan, lenders check your credit report to evaluate your creditworthiness. Such requests are recorded as hard inquiries in your credit report reducing your credit score. Moreover, making multiple hard inquiries within a short span of time will show you as a ‘credit-hungry’ borrower. As a result, lenders will reject your loan.  Therefore, instead of submitting loan applications to multiple lenders directly, visit online loan aggregators like Buddy Loan to get personal loans from multiple loan options. Moreover, inquiries through online financial marketplaces are considered soft inquiries and will not affect your credit score.

Documentation Needed For Personal Loan

The following are the most common documents required for personal loan online approval for salaried and self-employed individuals:

List of Documents Required for Salaried Employees

Proof of photo identity (Any one) Passport, Voter’s ID, PAN Card, Driving License, Aadhar Card
Proof of Residence (Any one) Passport, Aadhar Card, Utility Bill, Ration Card, Driving License
Proof of Ownership of Residence (Any one) Property documents, Electricity bill, Maintenance bill
Proof of Income
  • Salary slips for the last three months along with Form 16
  • Bank statement for the previous six months where the salary has been credited
Proof of Job Continuity (Any one)
  • Employment certificate from the current employer
  • Certificate of experience (relieving or appointment letter from the previous employer along with job certificate)
  • Appointment letter from the current employer (if employment period exceeds two years)
Proof of Investment (if any) Fixed assets, shares, fixed deposit, etc.
Photograph One passport size Color photograph

List of Documents Required for Self-Employed Individuals

Proof of photo identity (Any one) Passport, Voter’s ID, PAN Card, Driving License
Proof of Residence (Any one) Passport, Aadhaar Card, Utility Bill, Ration Card
Proof of Residence Ownership (Any one) Property documents, Electricity bill, Maintenance bill
Proof of Office Address (Any one) Maintenance bill, Property documents, Utility bill
Proof of Office Ownership (Any one) Maintenance bill, Property documents, Electricity bill
Proof of Business Existence (Any one) Tax registration copy, Company registration license, Shop establishment proof
Proof of Income Income tax returns for the previous two years inclusive of Computation of Income, audit report, balance sheet, profit, and loss account, etc.
Bank statement Savings and current bank statement for the past one year
Proof of Investment (if any) Investments such as fixed assets, fixed deposits, and shares
Photograph One passport size color photograph

List of Documents Required for NRI Applicants

Proof of Identity Copy of your passport, Copy of your visa
Proof of Employment Appointment letter, Job contract, Identity/Labour card (if applicable), Official email ID or the HR’s email ID
Proof of Income Bank statements of the last 6 months, Salary slips or salary certificate
Photographs Recent passport-size photographs

List of Documents Required for Pensioners

Proof of Identity/Age  (Any one) Ration card, PAN card, Voter ID card, Passport, Driving license, School leaving certificate, Birth certificate
Proof of Address  (Any one) Aadhaar card, Passport, Ration card, Utility bills, Driving license.
Proof of Income  (Any one) Bank passbook, Bank statements of the last 6 months, Form 16, Income tax returns, Copy of pension payment order
Photographs Recent passport-size photographs

Tips To Apply For a Personal Loan Successfully

Here are a few essential things you have to keep in mind when planning to apply for a personal loan:

  1. Find the requirement for your loan
  2. Do complete research to get the best offer on interest rates.
  3. Check your credit history and your credit score and maintain above 750.
  4. Make sure all your documents are error-free.
  5. Choose a loan repayment tenure after you evaluate your repayment ability.
  6. Choose the loan amount only for what you need.
  7. Check your EMIs before applying for a loan.
  8. Be aware of the processing fee before applying for the loan.
  9. Decide if you want a fixed or variable interest rate based on your preference.

Also Read: 10 Best Tips for Successful Personal Loans

Final Take Away

Hope the article gave you clarity on the importance of checking your personal loan eligibility. Following the above-mentioned steps will help you leverage your chances to get instant approval on your personal loan.

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FAQs

Q. What is personal loan eligibility?
A. If you are someone who is looking for a personal loan, you must start learning about the money you can borrow and interest to make the overall loan journey experience hassle-free and seamless. Hence, it is essential to check your eligibility before applying for one. And if you meet all the criteria, you can enjoy the benefits of a personal loan to the fullest. 

Q. How to check personal loan eligibility?
A. You can check your eligibility using personal loan eligibility calculators. To check your eligibility, first enter the details such as Your Name, Monthly Net Income, Total years of work experience, age, Your existing EMIs, and Required repayment tenure. Based on the details you enter, the calculator will evaluate your eligible personal loan amount. 

Q. How is personal loan eligibility calculated?
A. Enter the required details such as your name, income, and work experience. Based on the details you enter, the calculator will evaluate your eligible personal loan amount. This tool will also help you to calculate personal loan eligibility to determine your eligibility beforehand so that you will have a clear picture of your expenses and you can set a budget.