The number of personal loan borrowers has increased over the years due to the availability of ready credit and the need for urgent financing. Personal loans are mostly unsecured loans that do not require a guarantor or security.
An eligible applicant can borrow up to Rs.25 lakh as loan amount for a repayment tenure of 5 years. Personal loan interest rates are generally higher compared to secured loans as they are riskier due to the lack of security or collateral.
Personal loans are also known as all-purpose loans as the money can be used for any purpose from paying for higher education or wedding to house renovation or vacation. The loan amount can also be used to pay for more urgent needs such as medical treatments, investing in equity funds, debt consolidation, and so on. To Know more about the personal loan Visit. www.Bankbazaar.com
What are the eligibility criteria of a personal loan?
Lenders approve personal loan applications based on the applicant’s repayment capacity and credit history. The general eligibility criteria of a personal loan are listed below:
Self-employed individuals and salaried employees can apply for a personal loan.
Applicants must be 18 years or above to apply for a personal loan.
A salaried applicant must have a minimum annual salary of Rs.1.5 lakh while a self-employed applicant must have a minimum yearly income of Rs.2 lakh.
Applicants must have a good credit score of 750 or above.
The income of an applicant represents the person’s repayment capacity and the credit score represents the creditworthiness of the individual. Applicants who meet the minimum income requirement and credit score are considered to be low-risk borrowers and hence the chances of loan approval are higher.
Those who have a poor credit score and do not match the minimum income criterion will be rejected as there are higher chances of personal loan defaulting in such cases.
How does your company type affect your personal loan eligibility?
Some lenders, especially banks offer instant personal loans to employees of reputable companies or corporates. Banks have seggregated companies based on their profile. Categories include listed and non-listed companies which are further differentiated into Super A, Cat A, Cat B, Cat C, Cat D, Silver, Gold, Platinum, Diamond and so on. Banks offer good deals on personal loans to state and central government employees and employees of top-rated private and public sector companies.
Advantages of working for a top-rated company
Applicants who are employed with the top-rated employers get faster loan approval than those who aren’t. The reason being that employees working for top-rated companies have stable jobs with decent income and therefore are less likely to default on their personal loans. Another reason is that the top-rated companies tend to hold steady salary accounts of their employees with these banks. One other advantage of being employed with a top-rated company is that the upper cap on the quantum of loan is higher. Which is not the case for employees who work for a non-registered or non-listed company or for an employer who is not in the top-rated category.
Alternate financing options for employees working for non-listed companies
The chances of loan approval may be slim for those applicants who work for a non-listed company or a low-rated one, and the upper cap on the borrowed amount also reduces for them. Such applicants can apply for loans with non-banking financial companies (NBFCs) or opt for peer-to-peer lending instead of being rejected by the banks. Loan rejection can have a negative effect on one’s credit score.
When it comes to personal loans, lenders don’t want to take the risk of disbursing loans to borrowers who do not have a regular source of income and stable employment with a registered company with top ratings. Salaried applicants working for top-rated companies get instant personal loan offers with quick loan approval, easy eligibility, minimal documentation, and fast loan disbursal. They also get better deals on the interest rate and loan amount. Those who work for non-listed companies can apply for personal financing with NBFCs for higher chances of loan approval.