How to Qualify for a Personal Loan?

A personal loan is highly useful to finance both emergencies and big expenses like those for education, home renovation, wedding, and holidays. Then you can repay it in EMIs within the given tenure.

Personal Loan

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 important 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 a fully 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 you apply 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

You should be running a business or working for at least 3 years to qualify for a personal loan in some banks.

The lender may also check your organisation’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 optimise user experience!

John R. Wright
Social media ninja. Freelance web trailblazer. Extreme problem solver. Music fanatic. Spent several months marketing pubic lice in the financial sector. Spent 2002-2008 supervising the production of ice cream in Africa. Had some great experience developing robotic shrimp in the aftermarket. Spent several years getting my feet wet with puppets in Miami, FL. Was quite successful at supervising the production of corncob pipes worldwide. What gets me going now is working with electric trains in Mexico.