How Banks Calculate Personal Loan Eligibility in India?

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There are many times when one feels the need for money for personal reasons. Personal Loan is availed by users for any purpose. Though it is an unsecured loan where no asset is mortgaged but still many banks and lenders give you the loan. Here, we discuss about the various factors that determine the eligibility for personal loan:

Income
The first thing that is considered by the bank is your income level. Most banks ask for income of upwards of Rs. 18000 per month while some consider only above Rs. 25000 per month.

Professional
Whether you are a salaried employee or are a business, your loan eligibility differs. Salaried income is considered as safest while self employed professionals like doctors, CA, CS, architects are also safe. You should also need to have ITR of at least two years.

Credit Score
Your credit score is an important parameter for personal loan eligibility. Where the CIBIL score is above 600, the person is considered as sufficient to qualify for personal loan. This credit score depends on various factors such as your current outstanding loans, previous repayment history, credit cards and more.

personal loan


Age
Generally, banks give personal loans to people aging 21 to 60 years of age. If the borrower does not fall in this age category, most lenders are not comfortable in lending money. Some banks offer pre-approved loan to their customers and thus, you can also check out with them. For pre-approved loans, the credit worthiness is determined via financial details like bank statements etc.

Employment History
The borrower should have a stable career and most lenders require a minimum of 1-2 years of experience. Being employed with single employer for long period of time improves your credit worthiness. Public sector banks mostly give personal loan to employees in government service.  For those who are self employed, the applicant’s business should have a turnover for more than five years.
For any questions, ask us in the comments section below.

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