A personal loan is best suited for individuals looking for relatively small amounts to fund certain events that are often unexpected and require a quick supply of funds. For instance, events such as a child’s school fee, a car loan, home renovation, a family holiday or unexpected medical emergency can require a personal loan. As salaried individuals are dependent on a fixed income every month, quarter or year, they may be financially unprepared for additional unexpected expenditures.
The personal loan eligibility varies from person to person based on a number of factors such as age, income, employment history as well as metrics such as current debt load and credit score. The specifics of personal loan eligibility criteria vary from lender to lender, however there are some general rules followed:
- Age: An applicant looking to apply for a personal loan must be over the age of 21 at the time of applying, and the duration of the loan has to conclude before the applicant reaches 60 years of age.
- Salary/Income: Any application seeking a personal loan must have a minimum monthly income of 10,000 rupees. This amount may vary based on the location of the applicant, as the metros tend to have higher salary requirements.
- CIBIL Score: A good CIBIL, or Credit Information Bureau (India) Limited score (in other words a credit score) will exponentially increase the chances of the application being accepted.
The specificities of the requirements will vary based on the lender, however, common requirements include residential as well as identification proof and a couple of passport photographs (may vary for online applications). Additionally, the applicant’s last/current salary slips alongside bank statements from 3 months prior or passbook records from the last 6 months are required to assess the financial health and therefore repayment ability of the applicant.
Most personal loans extend from a range of 12 months to 60 months. It is worth noting that while the rate of interest for these loans are usually more of less the same, the interest is levied on the outstanding payment and not the principal amount, the due is reduced with each payment
Conclusion: How to apply?
The application process for a personal loan has been immensely simplified due to digitization of the industry. Any applicant eligible for a personal loan can simply fill out a form along with some basic documentation. All you need to do is check that you meet the personal loan eligibility criteria and begin your application.