Personal Loans are readily available credit products in the financial market. These loans are gaining popularity among individuals exponentially. Within two quarters till September 2021, there has been significant increase in the Personal Loan Segment.
A Personal Loan can help you overcome financial shortfalls requiring prompt effort. You can get funds without pledging your assets to meet many purposes.
- Home improvement or repair expenses
- Debt consolidation
- Wedding expenses
- Travelling expenditure
- Medical costs
- Higher education
And other personal needs
In this digital era, getting approval for a Personal Loan is easy. However, you must meet the loan eligibility criteria before applying for a loan.
Personal Loan Eligibility Check
Personal Loan eligibility criteria include the following conditions:
Age Limit: Applicant’s age should be between 22 and 58 years.
Credit score: 750+
Income: Minimum annual income should be ₹20,000 per month (based on the resident city)
To secure a Personal Loan at an affordable interest rate, you should improve your Personal Loan eligibility. Here are a few aspects that can help you to get approved for a Personal Loan without hassles.
1. Limit your Fixed Obligation to Income Ratio (FOIR)
Lenders evaluate your repayment capacity while considering your loan application for approval. Through your Fixed Obligation to Income Ratio (FOIR), they determine your existing income towards debt repayments. A high percentage of your income used to repay your debts decreases your creditworthiness. Financial institutions prefer a FOIR of up to 40-50%, including the EMI of your new loan. Therefore, it is good to repay your dues and credit card bills before applying for a new loan to keep your FOIR within the preferred range by the lender.
2. Maintain a good credit score
A good credit score is one of the primary eligibility conditions to secure a Personal Loan from leading lending institutions.
It depicts your creditworthiness to repay the loan based on how well you have handled your previous debts. Credit bureaus assign credit scores to individuals. The credit report includes the complete history of your loans, repayments, and outstanding balances. This information is used to assign a borrower’s credit score. You can maintain a high credit score with a few tactics. A few of those are:
– Avoid making frequent and multiple Personal Loan applications
– Keep your credit utilisation ratio low
– Consider accepting new credit cards with a high limit
– Manage your credit card payments
3. Show Additional Source of Income
The lender needs to verify your available financial resources to confirm whether you can repay your loan amount within the stipulated time frame or not. The lender may offer you a lower loan amount with your basic income source. An additional income source like dividends on shares, rent, or others can boost your Personal Loan eligibility to get the desired loan amount. You can get up to ₹30 lakh to fulfil your financial requirements. The higher the earnings, the more quickly you can repay your debts. Thus, mentioning an additional income source works in your favour to get approved for a Personal Loan.
4. Consider Joint Loan or Co-signer
It may be that a loan seeker’s credit profile does not meet the eligibility criteria determined by the lender. As a solution, you can include a co-signer as a co-applicant. It can be your parent, spouse or other trustworthy individuals. Make sure their credit score is high enough to meet the eligibility criteria. It will boost your chances of getting approved for a loan and a higher Personal Loan amount at a competitive interest rate.
5. Avoid Multiple Applications Altogether
Multiple loan applications at the same time can hurt your credit score. A borrower should avoid making many loan applications because a credit-hungry attitude is one of the leading factors to getting rejected for a loan, further decreasing your credit score. Do not hurry when you have an urgent financial requirement. Before looking for a Personal Loan with another credit provider, you should try your existing lender.
6. Choose a Long-term Tenure
You can choose the most suitable repayment tenure to make easy repayments. A longer-term repayment tenure spreads your instalments in smaller amounts. A loan with a longer term can reduce your EMI burden. Also, it reduces the impact on your FOIR. You can use an online Personal Loan calculator to estimate EMIs and interest rates.
If you are looking for an instant Personal Loan in Chennai, you can contact Poonawalla Fincorp, which can offer Personal Loans with a tenure of up to 60 months. You can get a Personal Loan up to ₹30 lakh if you meet the eligibility criteria. So, before applying, check the Personal Loan eligibility set by the lender and apply online.