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Banks and lenders have specific benchmarks to decide who gets approved. The criteria act as filters to ensure loans are granted responsibly. But what exactly are these benchmarks and how do they impact your chances? Let’s break it down so that you can understand how personal loan eligibility works
You need Rs 5 lakhs to cover an urgent expense and now you’re wondering, ‘Can I actually get a personal loan approved?’ It’s a common question that many of us face when we need quick financial assistance. While personal loans are known for their flexibility and accessibility, not everyone qualifies for one right away.
Banks and lenders have specific benchmarks to decide who gets approved. The criteria act as filters to ensure loans are granted responsibly. But what exactly are these benchmarks and how do they impact your chances? Let’s break it down so that you can understand how personal loan eligibility works and what lenders look for before approving your application.
Age
Lenders check your age to see if you’re in the right range to borrow a loan. For salaried people, this is usually between 21 and 60 years and for self-employed individuals, it can go up to 65 years. The idea is simple—they want to make sure you’re in a stable earning phase. If you’re younger, you might need to show that you have a steady job, while older applicants nearing retirement might face challenges because of fewer earning years ahead.
Monthly income
Your income is a direct indicator of your ability to repay the loan. Whether you’re earning ₹25,000 a month or more, lenders want to see consistent inflows. For salaried individuals, this means regular salary credits backed by proof like pay slips or bank statements. For self-employed individuals, tax returns and profit statements highlight your earning potential. Lenders often set minimum income requirements, which can vary based on your city or town’s living standards.
Job/employment type
A stable job is a green flag for lenders. Working in a reputed organisation or holding a government job is seen as less risky. Self-employed professionals and business owners may also qualify, but they might have to jump through a few more hoops to demonstrate stable and reliable earnings. It showcases lenders that your income source is consistent, be it a monthly paycheck or business profits.
Work experience
Your employment history is like a resume for your financial stability. For salaried applicants, most lenders expect at least 1-2 years of total work experience, with 6-12 months in your current role. Self-employed individuals may need to prove their business has been operational for at least 2-3 years. This criterion reassures lenders that you’re not just financially capable today but likely to remain so in the near future.
Credit score
Think of your credit score as your financial trustworthiness in a single number. It’s a snapshot of how responsibly you’ve managed loans and credit in the past. A score above 700 is often ideal, signalling that you’re a low-risk borrower. If your score is lower, it doesn’t mean automatic rejection—it just means you might face higher interest rates or stricter terms. Build and maintain a strong credit score. You can do this through timely payments and responsible credit usage.
Repayment capacity
Ultimately, lenders want to ensure that your monthly income comfortably supports the loan’s EMI without stretching your budget too thin. This is where repayment capacity comes into play. Banks and NBFCs calculate this by looking at your income, existing financial obligations (like rent or other loans) and how much of your earnings are free to cover the new EMI. A healthy debt-to-income ratio is key to proving you’re ready to handle the financial responsibility of a personal loan.
Choose a provider that aligns with your needs
If you’re looking for instant loans, Unity Small Finance Bank could be a good choice. The process is simple and fast, with approvals in just 15 minutes, making it helpful for emergencies or planned expenses. With a 3-day cooling-off period, you get time to reconsider your decision if needed. Checking the eligibility criteria beforehand can help you decide if it’s the right fit for your financial needs. With minimal paperwork and quick disbursal, it’s a hassle-free way to access funds when you need them the most. Whether it’s for medical bills, travel or any urgent need, check out the convenient solutions available.
Disclaimer-
(This article is part of DMCL Consumer Connect Initiative, a paid publication programme. DMCL claims no editorial involvement and assumes no responsibility, liability or claims for any errors or omissions in the content of the article. The DMCL Editorial team is not responsible for this content.)
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