Personal loans are unsecured loans (no mortgage needed). These loans are given by banks and NBFCs (Non-banking financial companies) to customers who need immediate access to money for any personal reason. The eligible loan amount depends on salary & credit score of the person applying and is normally between Rs 50,000 (Fifty thousand) to Rs 400,000 (Forty Lakhs).
Since personal loans are unsecured, financial companies prefer giving personal loans to salaried employees (because they have a fixed monthly salary and savings).
Criteria’s for eligibility of Personal Loan
- Age – Age of the person applying the loan should be between 21 and 60 years. Some banks give loans only to working professionals who are above 25 years.
- Loan Amount – Varies based on financial institutions, we have seen customers receive as much as forty lakhs as personal loans. Loan amount eligibility depends upon your income and credit score etc.
- Net Monthly Income – Banks prefer giving loans to individuals whose salary is Rs 20,000+. Some banks have a higher minimum salary requirement.
- Minimum Work Experience – Financial Institutions prefer giving loans to individuals who have a work experience of over three years. However, some give loans to individuals with lesser work experience.
- Working for Approved organization – Each financial institution has a list of companies whose employees are approved for a personal loan. Although the list is comprehensive, it’s still a deciding factor for personal loan eligibility.
- Cibil Credit Score – Credit score plays an important role because it tells financial institutions, how well you are handling your current loans.
- Qualification or Registration proof – In case of some professions like doctor, architect etc, companies can request registration proof from the applicant.
- Years in current residence – Financial institutions prefer giving loans to individuals who have been living at the same address for at least one year. They might request a copy of the lease or property ownership documents.
- Existing credit cards – We have seen that financial institutions prefer giving loans to customers who have an existing credit card.
- Home Loan – If you already have home loans, banks would prefer giving you a personal loan because an existing financial institution has already checked your credit worthiness and given you a bigger loan.
- Educational Qualification – Financial companies normally giving loans to customers who are a graduate (have completed a bachelor’s degree) or above.
- Profession – We have seen that banks and NBFC’s prefer giving loans to salaried individuals. People who are self-employed can get a personal loan, but the document required are exhaustive (like High turnover value Income tax return, audited business account books and much more).
- Existing Relationship – Financial Institutions prefer giving you a personal loan if you have a salary account with the bank.
Have you come across any other eligibility factors which financial companies have requested when you applied for personal loans? Please share in the comments section below so that we can include it in the article.