Factors affecting your personal loan offer

An unexpected medical bill, a dream wedding, or college fees all be handled with the help of a personal loan. But just like any other kind of loan, a personal loan requires you to meet the lender's eligibility criteria. Although personal loan eligibility criteria and personal loan interest rates can vary from lender to lender, there are a few requirements that you must meet to be authorised for a loan from any lender.

Factors that affect your personal loan offer:

 1. Your work history:

The minimum years of experience often required varies depending on the lender, the type of your profession, and other criteria. In most cases, a minimum of three to five years of relevant work experience is needed for a salary-based position.

2. Your monthly wage:

Even though your monthly income is important for all loans, it is usually backed up by security or collateral for loans such as a home loan, car loan, or gold loan, but not for a personal loan. Your ability to repay the loan on time is a concern for the lender, therefore they will verify your regular income. The minimum income standards also change from one place to the next. In general, the minimum requirement is higher in urban centres such as Mumbai, Delhi, and Bengaluru due to the high expenses of living there.

3. Your relationship with the lender:

You may be considering applying for a loan from the same financial institution where you maintain your bank, savings, and/or fixed deposit (FD) accounts. Additionally, if you have borrowed money from the same bank in the past and paid it back, you may be eligible for lower personal loan rates on future loans. You may be able to negotiate for lower interest rates and larger loan amounts if you are a long-standing customer. In good faith, the bank may agree to your terms and approve the loan in less time.

4. Your credit history:

A good history of paying off debts, such as loans and credit card bills, will reflect well on your credit score. Since personal loans don't require collateral, your credit score is the most important thing that determines if you can get one. If your credit score is 750 or higher, you have demonstrated a history of prompt bill payment. This assures your creditors that they will also be repaid on schedule. On the other hand, poor financial planning leads to a lower credit score, which is unacceptable to lenders. Prompt payment of easy monthly instalments (EMIs) and credit card will, however, raise your score.

5. Your age:

The most important factor determining whether you qualify for a personal loan is your age, so keeping that in mind is essential before applying. A borrower's age is an indicator of financial maturity and, hence, their ability to repay a loan.

6. Your current liabilities

Lastly, your current debts will be taken into consideration when extending a personal loan offer. If you are already paying back a loan, the lender would like to know more about it. This is because the bank needs assurance that you will be able to pay back both your current debts and your new personal loan.

As a loan applicant, you can also use these factors to choose which bank or non-banking financial company (NBFC) has the best personal loan offer for you. Bajaj Finance offers personal loans of up to Rs 35 lakh, with quick funding and flexible tenures that make it a good choice for everyone. Along with personal loans, they also offer a variety of tools, such as an EMI calculator and a personal loan eligibility calculator, that make it easy to figure out your monthly payments on ease.

Moneycontrol journalists were not involved in the creation of the article