How is My Eligibility for a Personal Loan Calculated?

Facing a cash crunch and don't have enough savings? Worry not! Take a personal loan. Use the funding from a personal loan to meet those sudden, large expenses. But first, find out if you are eligible to apply for one. Personal loans are unsecured loans which require no collateral and hence come at a higher rate of interest. However, there is a list of eligibility criteria in place which needs to be met in order for you to get a personal loan.

Loan eligibility for salaried individuals differs from self-employed individuals. Following are the factors that are taken into consideration - age, monthly income, employment stability, credit score. Age: Minimum age should be 21 years. A lot of banks/financial institutions require the individual to be of minimum 23 years of age. Monthly Income: Most of the banks these days recommend that the minimum monthly income should be at least INR 15,000. However, this can differ from one institution to another. A lot of them ask for a minimum income of INR 18,000 per month. Total Work Experience: You are eligible for a personal loan if you have been working for a minimum of 2-3 years. This may vary from bank to bank. Credit Score: If you have a good credit score, in this case, above 650-700, then you are eligible for a personal loan.

Loan eligibility for the self-employed is calculated based on age, company turnover, Gross annual receipts, and business stability. Age: Minimum age of 25 years for doctors and 28 years for self-employed individuals.This may differ based on the bank or the financial institution. Business Stability: Should have been in business for at least 5 years. Minimum profit after tax: For self-employed individuals, the MPAT must be a minimum of 2 lakhs a year. Credit History: Credit score is an important indicator for banks to approve a personal loan for self-employed individuals. Since the income is not regular, credit repayment is the only way banks can determine if the applicant is eligible. Association with the bank: Being a self-employed individual, if you are looking to apply for a personal loan, then it is a pre-requisite in a lot of banks that the applicant is an account holder with the bank for at least one year.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.