How to Qualify for a Personal Loan?
A personal loan is beneficial to finance both emergencies and significant expenses like education, home renovation, wedding, and holidays. Then you can repay it in EMIs within the given tenure.
For that, you must first get loan approval. So, here are some ways to qualify for a personal loan.
Top 4 Tips to be Qualified for a Personal Loan
#1 – Maintain a Low Debt-To-Income (DTI) Ratio
Ensure that you have a low DTI ratio to qualify for a personal loan. To calculate it, divide your total monthly debt payment by the gross monthly income.
For that, include the following under the total monthly outlay:
- Credit card bills
- Medical bills
- Loan payments
- Rent
- Car insurance
- Health insurance
- Child support payments
- Other dues (excluding household expenses, utilities, and taxes)
#2 – Keep a High Credit Score
It’s also essential to have a high credit score to qualify for a loan. Plus, it helps you get a loan at competitive interest rates.
You can build a good credit score and history with:
- Timely EMI payments on loans
- Timely credit card bill payments in full
#3 – Opt for a Co-Signer
Get a co-signer from your family or friends with a high CIBIL score if:
- You have a high DTI ratio.
- Your credit score is too low.
#4 – Meet the Eligibility Criteria
Choose the best bank that lets you apply online for a personal loan through an entirely paperless, digital procedure with an instant loan disbursal.
Then ensure to meet the eligibility criteria of the lender that generally includes the following aspects:
Age
The age limit specified by some banks to apply for a personal loan online is:
- 23 to 60 years for salaried individuals
- 25 to 65 years for self-employed individuals
- Income details
According to your credit history and score, the chosen bank will decide the minimum income requirement to qualify for the loan. Generally, it’ll consider your net income or in-hand salary to approve a loan request.
You must show valid income proof when applying for a personal loan online. This can be your income tax returns (ITRs) or salary slips.
If you live in a metro city like Delhi, Hyderabad, Chennai, Bengaluru, or Mumbai, the minimum income requirement for a loan approval might be higher. That’s mainly due to higher living expenses in such cities. Likewise, you may be approved for a loan at a lower income requirement if you live in a Tier-II town or city.
Work details
It would be best to run a business or work for at least 3 years to qualify for a personal loan in some banks.
The lender may also check your organization’s reputation to determine your work stability. Once it’s found satisfactory, you’ll get loan approval at a relaxed minimum salary requirement.
Ensure that your chosen lender also offers other benefits besides online application and instant disbursals of personal loans. These include a flexible repayment tenure of up to 60 months, balance transfers of credit cards and personal loans at affordable rates, and competitive interest rates to optimize user experience!
