Friday, 3 November 2017

Your Personal Loan Eligibility Checklist, Let’s Check!

Loan is vital for modern man. You can avail a loan for all kinds of financial needs as well as for fulfilling your dreams. A loan is a sort of debt agreement between a lender and a borrower. The agreement makes it compulsory for the borrower to repay the whole loaned amount back to the lender along with some interest after some time.

Personal loans are basically unsecured loans wherein you don’t require a mortgage or do not entail a guarantor to avail the loan. But before applying for a personal loan, you are required to meet the eligibility criteria which may vary from bank to bank.
Personal Loan Eligibility Checklist
Both salaried person and self-employed can apply for personal loans. Some of the common grounds to check the eligibility are discussed below:

Age:
You should be in the age group of 21 to 61years, and if you are a self-employed person, it will be 60 years.
The Institution of the Borrower
The brand value of your organization can also be beneficial for you to apply for personal loan and you can get the loan at a good interest rate.
Income
It will be one of the important factors in this subject matter. You must earn at least Rs 4000 to Rs 20000 income per month. The maximum range of loan usually depends on the income of an individual.
Work Experience
You should have minimum 1 to 2 years work experience, and if you are working in a government sector, there will be more chances of getting the best choice loan.
Already Existing loans
If you already have these types of loans, you will obtain smaller loan amount but if your financial condition is good enough to pay for the additional loan the bank cannot decrease the loan amount. The ongoing loan reduces the repayment ability of the borrower.
Required Documents
•    ID proof
•    Residence proof
•    Bank statement
•    Job confirmation proof as well as Income proof
Role of Credit Score
The minimum credit score required for personal loans is 750. But it’s not only what you need. You must have to focus on your credit history and try to improve it as good credit score is more efficient for you.
How Banks calculate your eligibility?
The banks will calculate the applicant’s eligibility from their particular loan calculator. The loan calculator will accept your present monthly income or EMIs, your desired interest rate and repayment amount as an input. Through loan calculator, the eligibility can be considered in two different ways:-
The first one is multiplier method. In this process, you can calculate your eligible loan amount from your net salary and organization background. Usually, the bank has multipliers in between the range of 9-18 times of your net salary. You can apply the following formula for this purpose.
Loan Eligibility = (Your Net Salary) x (a number from 9 to 18)
The second method is Fixed Obligation Income Ratio (FOIR)- In this technique, your loan eligibility is determined by monthly installments (EMIs) with regards to net income. Banks usually receive 40 to75 percent of your net earnings as EMIs, current obligations and credit card outstanding debts. If your owed money goes beyond bank constraints, then the bank will decrease your loan money or raise the tenure of your loan. The overall obligations are considered before approving loan. But, if you aren't able to pay the loaned amount on your name, you can be shortlisted in loan defaulter list. So be sure before applying for the loan.
How to Enhance Loan Eligibility?
For this purpose, you need to understand few points. Firstly, stop paying for those loans which are almost on the verge of closure. Rather than paying last EMIs one by one, consider prepaying it. One time prepayment of previous loans can help you to talk with banks to acquire upper loan amount.
You can also negotiate with the existing lenders to move your current loans to a lesser rate and decrease the EMIs that might facilitate you to obtain a higher new loan.

In a nutshell, at last, you need to remember that you will own these loans only if you are sure about repaying back borrowed money.

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