A personal loan is an all-rounder funding solution. You can use it for your children’s education, medical emergencies, buying a car and any other needs.
It is an unsecured loan, and due to this risk, personal loan interest rates are generally higher than interest rates on other loans.
Personal loan eligibility or the amount of personal loan you are eligible to apply for depends on various factors. If you are aware of the personal loan eligibility criteria, you can work on them and increase your loan eligibility.
Personal loan eligibility criteria
Documentation
KYC documents, Salary Slips, employee ID card and salaried bank accountstatements are the basic personal loan documents. Once you have them, you don’t need anything more to get a loan application approved.
Income
Your income decides your capacity to repay the loan. Banks and financialinstitutions consider that people with higher income save more. More savings
means more money available to repay the loan. As such, people with higher
income have higher eligibility score than those with lower income.
Occupation
You should be an earning individual. You should have a regular source of incomewhether you are a private, MNC or a salaried individual or a Government
employee.
CIBIL score
Apart from your ability to pay, banks and financial institutions also check yourwillingness to pay. Your CIBIL score determines your willingness to repay the loan. A good credit score has a positive impact on your loan eligibility and vice-versa.
Age
A resident of India aged between 23-55 years can apply for a personal loan. Ageis a key element in deciding the tenor as well as the amount of loan. The younger
you are while applying for a personal loans NZ, the more favourable it is for you.
10 Tips To Increase Your Personal Loan Eligibility
Here are some tips to boost your personal loan eligibility. Following the same will help you get the loan application approved at a lower rate.1. Improve your CIBIL score
CIBIL score is an impression of your creditworthiness. Improving your CIBIL score is vital for increasing your personal loan eligibility. You should review your credit report on a regular basis to increase your CIBIL score.2. Pay off existing loans
Existing loans and debts are not only a burden on you, but they are also a risk for the lender. Hence, paying off your debts before making a personal loan application will increase your loan eligibility.3. Add a co-borrower
You can add an earning family member like your spouse or parent as a co-applicant. Having a co-borrower means your loan application will be processed in a higher income bracket making you eligible for a larger loan amount.4. Choose a longer loan tenor
You can choose a longer loan tenor for improving your personal loan eligibility. If you choose a longer tenor, you will have more time to repay the loan. A longer tenor is beneficial for both the borrower and the lender. Hence, it works towards increasing your loan eligibility.
5. An additional source of income
Your income is the basic eligibility criteria. If you can increase your income by an extra source like house rent, interest on investments, etc. it can increase your personal loan eligibility.6. Avail Step-up loans
Availing step-up loans is a beneficial step for professionals for increasing their loan eligibility.7. Pay credit card bills timely
If you pay your credit card bills on time, it boosts the confidence of the lender that you will repay the loan timely. It also enhances your Credit score, and hence, it is advantageous for your loan eligibility.8. Declare all sources of income
While making a loan application, it is important to declare all sources of income like rental income, income from dividends and bank interest, interest on investments. Declaring all types of income enhances the chance of your loan application approval.9. Make an application to a known bank
If you make a loan application to a bank with whom you already have an account, it can be favourable. Having a trustworthy relationship with the lending bank can increase your personal loan eligibility for easy approval.10. Maintain a low debt-to-income ratio
Your monthly debt divided by your gross monthly income is your debt-to-income ratio. Lower the debt-to-income ratio; higher is your loan eligibility. Thus, you should keep this ratio as low as possible.Now that you know the tips for increasing your personal loan eligibility, you can go ahead with it.