What are the requirements to get a Personal Loan?

Need a personal loan but don’t know where to start? Check out our quick guide to getting a personal loan. In this article, we will discuss the requirements necessary to qualify for a personal loan, as well as the different types of loans available. We will also provide tips on how to get the best deal on your personal loan.

Personal Loan Instant Loan

Personal loans are money that you borrow for almost any reason, including debt restructuring, unforeseen medical bills, new gadgets, holidays or even a student loan. The money you repay – including interest – is usually paid on monthly installments for two to five years. The majority of personal loans are unsecured, which means they do not have collateral.

Eligibility Criteria for Personal Loan

The following are some main factors that the lenders take into account before giving an individual a personal loan. Although the weight of various factors the vary from lender to lender, a key factor a lender takes into account when assessing the eligibility of a prospective borrower for a personal loan can be seen in the following list:

Credit score

This is a 3-digit number that explains how you used to deal with credit card repayments and personal credit. This ranking is determined by credit offices between 300 and 900. The closer your score is to 900, the better your chances for a new personal loan are usually.

Employer reputation

Banks typically provide personal loans to employees employed in private , government or multinational corporations, as well as to independent workers and professionals such as corporate men (CA), physicians, architects, etc. Lenders favor wage professionals in renowned companies or governmental workers for personal loans because of their workplace security and prestige as employers.

Age

Most banks provide personal loans to people between 18 and 60 years of age. Although older people may also be eligible for a personal loan like a pension loan, other limitations are usually placed on granting of these loans.

Minimum pay: most banks’ minimum monthly wage requirements for salaried workers are Rs. 15,000. Nonetheless, the banks prefer more individuals with a minimum monthly income of Rs. 25,000. And a gross annual income of minimum Rs. 5 lakh is typically required for self-employed persons to apply for a personal loan.

Work / business experience

Most banks say that workers must have a minimum overall job experience of 2 years and a minimum work experience of 6 months in the current company to apply for a personal loan. For self-employed people and professionals, they typically have to work for a total of 2 years in the present company to qualify for an unsecured personal loan.

How to check Personal Loan eligibility?

Multiplier method – This approach allows banks to use a multiplier to measure the value of the loan. The multiplier you use depends on your salary and client profile in your house. The higher the salary and more trustworthy the organization, the greater the multiplier and availability of your loan. In general, banks apply a multiplier of 9 to 27, which is defined for different salary levels and internal corporate categorization by the bank. The higher the category to which a company belongs, the eligibility of the loan amount will be greater and the personal interest rate will be lower.

FOIR (Fixed Obligation Income Ratio)

By this method, your eligible loan amount is calculated on the basis of your maximum EMI or monthly remittances for net income after other expenses, such as rent and EMI, are taken into account. Banks or NBFCs typically accept 50-75% of your income as EMI, existing fixed bonds and unpaid credit cards. When the bonds go outside the norms of the bank , the bank will either that or raise the duration of the loan.
The bank must measure your eligibility to not exceed 50 percent of your revenue through fixed bonds (including EMI for the new loan). This rate can vary from borrower to borrower. This can go up to 65 percent for high-income lenders.

Documents Required for Personal Loan

For salaried professionals

• Proof of Residence: Rent Agreement / Utility Bill (not more than 3 months old) / Passport (any one)
• Proof of Identity: Passport / Driving License / Voters ID (any one)
• PAN Card
• Latest 3 months Bank Statement
• Salary slips for last 3 months
• 2 passport size photographs

For self- employed individual

• PAN Card
• KYC Documents: Proof of Identity; Address proof; DOB proof
• Proof of Residence: Leave and License Agreement / Utility Bill (not more than 3 months old) / Passport (any one).
• Income proof (audited financials for the last two years)
• Latest 6 months Bank statement
• Office address proof
• Proof of residence or office ownership
• Proof of continuity of business