Personal Loans are unsecured. They let you borrow instant funds for any personal use. It can be wedding expenses, higher education, emergency medical expenses, or any other substantial need. However, many find it challenging to secure a Personal Loan due to various factors. The borrower has to meet the eligibility criteria. If you fail to meet the requirements, it can affect your loan approval. Let us know some lesser known facts that can boost your eligibility for Personal Loan.

1. Know Your Personal Loan Eligibility

We must understand Personal Loan eligibility guidelines before applying. Most Personal Loans require no collateral. This is why lenders usually review your credit history when you come seeking financial assistance.

Age, income, credit score, employment, and debt-to-income ratio, among other factors, may be considered. To qualify, one has to meet the minimum requirements as specified, while the absence of financial debt is very important.

2. Good Credit Report

The lender will review your credit status when approving any loan. They are more willing to offer you money if you have a good credit score, make all your payments on time, and use credit wisely.

Sometimes, people forget to pay their EMIs and instalments, affecting their credit scores. Getting an emergency loan may be easier if you regularly check your credit report for missed payments and correct your repayment course.

Moreover, your credit report indicates how you use credit and repay loans. Most people with credit scores over 750 can get a Personal Loan without much hassle, though other factors like income type also matter.

So, pay your bills on time, utilise less credit, and open fewer credit accounts to maintain a high credit score.

3. History of stable employment

A steady work history is essential for getting an emergency loan. A stable job shows the lender that you can pay the bills on time.

Moreover, many job changes can be a bad sign, but working for the same company for a long time can help your chances of getting a loan easily.

If you work for yourself, ensure you have filed ITRs in the previous financial years and that your repayment history is good. Also, getting a loan would be easier if you are employed full time, provided you have the last 3 to 6 months of payslips to show, along with other important details such as a company experience letter and offer letter.

Furthermore, a history of working for consecutive years in the same salaried work shows stability and dedication, which will improve your loan application.

4. Low debt, high income

To get a loan, it would help to show how much money you make. You must also know your current debt. How much of your salary goes to bills? Lenders consider this to determine your loan amount.

You can get new loans more easily with fewer past debts. Also, as it makes sense, getting an emergency loan can be easier if you pay off your debts.

Lenders are likelier to approve loans if an applicant has less than 50% of their income going towards debt. If NBFCs notice that you couldn't pay more than half of your monthly gross income on debts, including the probable additional loan, that would not look good on your part.

To get your debt-to-income ratio under control, make a budget, merge your debts, and look for small additional income streams (like freelancing on the side) to pay off your debts quickly.

5. The employer's reputation

Getting a loan can help if you work for a good company. Lenders consider jobs with big, well-known companies or the government as a sign of steady income and safety. A stable and financially sound business can make you a more attractive loan candidate, especially if you get a salary.

NBFCs usually have a list of companies they trust. This list usually includes large businesses, firms, and government agencies. Getting a loan may be easier and faster if you work for one of these accepted companies.

Learning about a company's reputation and how that might affect your ability to get a loan can help you when looking for a new job.

6. Relationship with Lender

A relationship with the lending institution before requesting a Personal Loan can help. They know more about your money management habits. If you have a savings, fixed deposit, or other account with them - they can form patterns in your money behaviour.

This knowledge and sustained financial relationship with them may make them more likely to lend you money.

Stay with one bank or financial organisation for better interest rates, lower costs, and faster loan processing.

7. Right Loan Amount Request

Be upfront about your spending if you wish to borrow a lot. Asking for the amount you can afford increases your chances of getting the loan. Before lending, lenders evaluate your income and expenses. Your income may disqualify you from borrowing more. So, only borrow money you can afford.

If you require a Personal Loan for a wedding and think that Rs. 10,00,000 will be enough, do not apply for an amount of Rs. 12,00,000 to fund your needs.

8. Correct and Complete Documentation

Applying with all the proper paperwork is very important if you want the loan process to go quickly. Missing or incorrect paperwork could delay or reject your application.

Please use the correct documentation of your identity, address, income, and occupation. Reread the information to ensure it is correct.

For most Personal Loans, you must provide proof of your name, address, pay stubs, or bank records. People who work for themselves may need to show more paperwork, such as bank records and proof that they filed their business (ITR).

Clear, up-to-date, and correct papers will help avoid delays and increase the chances of acceptance.

Conclusion

You must meet the basic requirements for Personal Loan eligibility. The above points, which are less discussed, can give you an extra edge. Knowing the lender, asking for the right amount, providing accurate information, and being okay with your credit may improve your chances.

Remember these tips to secure a Personal Loan and get the money you need promptly.