Navigating Personal Loan Eligibility: Are You Qualified for a Personal Loan?
According to a 2023 study, 53% of Indians took their first personal loan (PL) before turning 30, while 22% did so before the age of 25.
This rising demand for personal loans to address various financial needs is quite evident. However, to mitigate the risks involved in lending, lenders are quite selective about the applications they approve.
Several factors determine personal loan eligibility. Applicants must meet lenders’ criteria regarding age, income, residency, credit score, and employment to secure personal loans with favourable terms.
In this article, we’ll understand the importance of navigating loan eligibility and help you understand whether you qualify for a personal loan.
Why Should You Check Your Personal Loan Eligibility?
Personal loans are commonly used to cover unexpected expenses or major life events like medical bills, home improvements, or weddings. If you are not aware of your personal loan eligibility before submitting your application, you risk rejections for reasons such as:
- Submitting incomplete or incorrect documents
- Applying for an unsuitable loan amount
- Not meeting the lender’s borrower profile (e.g., income, credit score)
Avoiding rejections is crucial not only for saving time and effort but also for preserving your credit score. Each rejected application can result in a hard inquiry, which may negatively affect your credit score over time.
To protect your creditworthiness and increase your chances of approval, it’s best to apply for a personal loan only after confirming you meet the eligibility criteria.
What Are the Personal Loan Eligibility Requirements?
Although specific PL loan eligibility requirements can differ from one firm to another, there are some basic criteria that you must meet. Let’s take a look at the basic requirements of SMFG India Credit, one of India’s leading financial institutions:
- Nationality: Applicants must be residing citizens of India.
- Age: Applicants must be at least 22 to apply for a personal loan. Their age must not exceed 65 at the time of loan maturity.
- Work Experience: Applicants must be salaried and have at least 12 months of work experience. Additionally, they must have been in their current job for at least 6 months.
- Income: Applicants who reside in Delhi or Mumbai must earn at least INR 25,000 per month. Applicants from other cities should meet the minimum monthly income requirement of INR 20,000.
- EMI as a Fraction of Income: The EMI amount should not exceed 60% to 70% of the total monthly income of applicants.
*Please note that these are the basic eligibility criteria. The final eligibility depends on several factors including SMFG India Credit’s policy at the time of loan application.
What Is an Online Personal Loan Eligibility Calculator?
A personal loan eligibility calculator is an online tool designed to help you estimate the maximum loan amount you’re likely to qualify for. It can give you a realistic sense of your borrowing capacity based on factors such as income, preferred loan tenure, and existing financial obligations.
SMFG India Credit offers a free, user-friendly personal loan eligibility calculator to assist applicants in determining their loan eligibility. Here’s how you can use it:
- Access the SMFG India Credit personal loan eligibility calculator.
- Choose whether you’re salaried or self-employed.
- Specify your age.
- Select your net monthly income (after taxes) by dragging the bar.
- Indicate your monthly obligations using the bar.
- Adjust the bar to select the interest rate.
- Choose your preferred loan tenure.
The calculator will display the personal loan amount you may be eligible for on the right side.
*Please note that the calculator only offers an estimate and is only for information purposes.
Summing Up
Ensuring that you meet the lender’s criteria before formally submitting your personal loan application can lead to faster approval and favourable loan terms. In contrast, neglecting these requirements may result in rejection, which can negatively impact your credit history.
You can check online eligibility calculators offered by reputed lending institutions to quickly assess your eligibility and make an informed decision. If you find that you don’t meet the eligibility criteria, take steps to improve your credit score, reduce existing debt, or explore alternative finance options. This proactive approach can increase your chances of qualifying in the future and securing better loan terms.
*T&C apply. Loan eligibility, loan terms, and loan disbursement processes are subject to the lender’s policy at the time of loan application.
