A personal loan is a quick and easy solution for all your financial needs that are urgent. It is a type of credit facility that helps you meet all your financial obligations and is an easy process.
The most important thing is that a personal loan does not require any collateral and comes with few restrictions on how to use money.
Other than personal loan eligibility depends on various factors, the criteria are usually not so stringent. This article will tell you about the meaning and eligibility of a personal loan.
Personal Loan Meaning
A personal loan is also referred to as a consumer loan in which an individual borrows money for different purposes. For instance, for a wedding, home renovation, vacation, or medical emergency, a personal loan covers it all.
It does not require any collateral and is offered with minimal documentation. Like other loans, you must repay a personal loan on the due date of a particular year.
The personal loan works pretty much on the same line as other loans, the key difference being that this loan can be used for a variety of purposes rather than a single purpose.
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Personal Loan Eligibility
Personal loan eligibility can be checked using a personal loan eligibility calculator. However, there are a few common points for everyone who wants a personal loan.
These points include:
- Individuals who are between 21 and 60 years of age;
- Such individuals must be salaried, self-employed, retired, students, business owners, and homemakers;
- The employment duration must be at least 2-5 years;
- The minimum income on a monthly basis for employees from Delhi and Mumbai should be around Rs.25,000, and from other places, the income should be Rs.20,000;
- The individual's CIBIL score or credit score must be 750 and above;
- The EMI of a personal loan cannot be more than 60-70% of the monthly income
Factors Affecting Personal Loan Eligibility
There are more than a few factors that affect the eligibility for a personal loan, such as
- The location
The geographical area where you reside can be crucial in determining if you are eligible for a personal loan.
- Income
Personal loan depends on the income. The higher the income, the higher the loan amount you can avail.
- Existing credit taken
If you've other loans, your possibility of availing a new loan gets lower as compared to when you have no credit to repay. Also, an already existing loan or credit is indicative of being under pressure to repay the loan, let alone availing of another loan.
- Credit history
The credit score, or CIBIL, has the most significant impact on the eligibility of your personal loan. The tenure, rate of interest, and loan amount borrowers depend on this credit history factor.
- Accommodation situation
If you live in a house of your own, you have higher and greater chances of having your personal loan application approved. Moreover, a rental home lowers your monthly income, thereby lowering or decreasing your chances of repayment potential.
- Place of work
Your place of work or workplace helps in determining whether you will get a personal loan or not. If you're working for a well-renowned company with a good market reputation and popularity can make you seem to come across as someone with a stable career and job.
Conclusion
A personal loan comes to your rescue when you need funds for a medical emergency, a wedding, a vacation, etc. It can finance all your needs and requirements. A personal loan has various benefits, such as an attractive interest rate, hassle-free process, speedy documentation, etc.
Before applying for a personal loan, you must understand the eligibility criteria for a personal loan. This will be of help when you are in need of immediate money the next time.
