It is crucial to check your eligibility before seeking a personal loan. This helps you better prepare for the loan. The eligibility for a personal loan is affected by a few factors such as your income, your age, whether you are self-employed or salaried, your credit history, your existing debts etc. A personal loan eligibility calculator enables you to understand these factors well and shows you how much you will require paying EMIs based on these factors. This is a useful tool to know beforehand how much your monthly liabilities will be against your loan. This online tool is available on all the lender’s websites and free of cost.
How to use it?
You must fill out the details as requested by this tool while searching for information on the maximum loan limit you can avail. This is a user-friendly tool and you do not need to have any special technical expertise to use it.
First, you will need to enter your location details. Next, it will ask your age as the minimum age requirement to borrow a personal loan is 21 years and you should not exceed 65 years of age at the time of closing of the loan tenure. The next detail will be your net monthly income. If you are salaried, you will put your monthly salary and if you are self-employed, you will require putting your net profit after tax deduction. The last detail you will need to put in is the amount of EMI you want to pay. Experts say this amount should be equal to the total of all EMIs you are currently paying. This includes the payment of your credit card as well.
Once you submit all these details, your eligible loan amount will appear on the calculator. The advantage of the personal loan eligibility calculator is that you can adjust your interest rate and tenure of the loan according to your convenience.
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Deciding factors of personal loan eligibility
Though your monthly income is one of the major determinants of your personal loan there are a lot of other factors that lenders consider while giving you the loan.
- Credit score: Since there is no form of guarantee applied to a personal loan, your credit score is the most valuable aspect that will determine your eligibility. Having a credit core of more than 750 will establish that you have good repayment capacity. This will act as an assurance to the lender that you will pay your debts on time. While a poor credit score will work exactly the opposite.
- Monthly income: Your monthly income will show if you can pay your EMIs. Usually, a monthly earning of 25k is taken as eligibility criterion to get a personal loan. The debt-to-income ratio is important here, which means your monthly income should be greater than your monthly expenses.
- Age: Your age reflects your capacity to repay the loan. The minimum age requirement for a personal loan depends on whether your type of employment. Lenders prefer salaried employees who are 21 to 55 years old and self-employed who are 25 to 60 years old for a personal loan.
- Employer status: If you are working at a reputed organization for a longer period such as 2 years or more, your chances of qualifying for the loan are higher. On the other hand, if you change jobs frequently that will be considered a drawback by your lender and it will weaken your chances of approval for the loan.
- Relations with the lender: if you maintain goodwill with any lending organization, it might give you a personal loan on a low-interest rate. This happens when you previously obtained a loan and repaid it on time with the same lender.
While these basic requirements remain the same, the eligibility criteria may differ according to lenders. The location also matters. For example, the eligibility criteria for a personal loan in Delhi will be slightly different from other areas in the country. A personal loan eligibility calculator allows you to have better knowledge of these things within a few minutes.