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10 Smart Tips to Increase Your Personal Loan Eligibility


Personal Loan

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 account

statements 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 financial

institutions 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 income

whether 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 your

willingness 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. Age

is a key element in deciding the tenor as well as the amount of loan. The younger

you are while applying for a personal loan, the more favourable it is for you.

Personal Loan Eligibility

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.

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