Personal Loan eligibility is a set of criteria based on the requirements of a financial institution to assess the creditworthiness of a borrower who wants to avail a personal loan. This is basically to understand the repayment capacity of the borrower. This includes age, financial position, credit score, and credit history of the borrower.
The financial commitments and requirements can be availed by an individual with the help of a personal loan. A person who has to take care of unexpected expenses can surely opt for a personal loan. Big purchases, consolidation high-interest debts, wedding expenses, vacations, and higher education expenses all can be done with the help of a personal loan. The personal loan from any Bank or Non-Banking Financial company can be acquired at pre-agreed rates and terms as per the convenience of the parties. The loan repayment period can range from 12 months to 60 months depending on the convenience of the borrower. Some instant loan disbursement schemes are also available now for the benefit of the borrower.
The eligibility criteria of different Financial Institutions can vary from each other. But mostly the general criteria remain the same. People who are salaried applicants for a personal loan must fulfill some eligibility criteria. The age of the applicant must be within 23 to 58 years. The borrower must have a stagnant income of Rs 25000 per month or more. And the minimum work experience must be 2 years and at least 1 year with the current employer. If the person is a self-employed applicant, the age must be within 28 to 65 years with 23 years of business experience and a minimum turnover of Rs 40 lakhs per annum. The CIBIL credit score is one of the most essential requirements for getting a personal loan approved. A credit score of 700 and more is considered to be good.
A credit score represents the creditworthiness of the borrower, to the creditor or lending institution. It helps the lender to understand how efficiently the borrower has managed his finances and bills in the past. So a poor credit score can lead to a personal loan application getting rejected. The reason is that the creditors doubt that the borrower will make a default on the loan repayment. So before applying for a personal loan, one must always check his credit score and work on building it if it is not up to the mark.
Because most personal loans are unsecured so the fulfillment of eligibility criteria is a must. This helps the creditor to assess the repayment capacity and credibility of the borrower. The credit history and the credit score of the borrower are evidence of the same. The creditor before approving a personal loan always hesitates, the reason is repayment of the loan is uncertain and no collateral is attached to it. A Personal Loan Interest Calculator can pre-determine the monthly installments according to the interest rate offered by the financial institution. This will provide the borrower understanding of how to manage his monthly financial obligations.
Documents required to be furnished to the financial institution for a salaried employee are an application form with a photograph of the borrower, the identity and residence proof, the last 6 months Bank statements of the salary account, processing fee cheque, latest salary slip, and form number 16. And for the self-employed persons, all other documents remain the same except the processing fee cheque proof of business, the business profile, the last three years income tax returns, and lastly the last three years profit and loss statement and balance sheet of the current business of the borrower.
ICICI Bank Personal Loan Interest Rate now stands at 10.75 percent. The personal loan interest rates of other banks are: SBI Bank provides personal loan at 9.6 percent, Kotak Bank at 10.25 percent, Axis Bank at 10.4 percent, HDFC Bank at 10.5 percent, IDBI Bank at 12 percent. There are several other Financial Institutions including Banks and NBFCs who provide attractive rates of interest on personal loans and charge minimal processing fees for approving the loan.
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