Read on to understand how using smart tools like the eligibility calculator, you can make an informed decision before applying for a loan.
Personal loans are lifesavers in situations where you need money urgently. For home renovation, medical expenses, or vacations, a personal loan allows you to handle financial emergencies without dipping into your savings. Personal loans are unsecured, which implies you are not required to provide any collateral for availing yourself of one. There are no restrictions, either, on the way you want to use your loan amount. All these factors make personal loans highly convenient and user-friendly.
However, a couple of things that may come as a dampener are the stringent eligibility criteria and relatively high personal loan interest rates. Before you apply for a loan, we suggest you use a personal loan eligibility calculator. Doing this will give you the utmost clarity about all the aspects of your preferred loan scheme. An EMI calculator or an interest rate calculator can also tell you the exact monthly liability you will face once your repayment schedule kicks in.
The eligibility criteria for getting a personal loan
Banks and other lending institutions follow stringent eligibility criteria to assess the repayment capacity of potential borrowers. The personal loan eligibility criteria constitute several regulations as recommended by the Reserve Bank of India:
Now that you know the eligibility criteria, you can use Bajaj Finserv Personal Loan Eligibility Calculator to check if you cut. If you fall short, fret not; you can still improve your eligibility by following these easy steps.
How to improve your personal loan eligibility
• Consider Your Debt-to-Income Ratio
The debt-to-income ratio indicates your repayment capacity. Most banks consider the ideal debt-to-income ratio around 30-40% for personal loans. If your debt-to-income ratio exceeds 50%, you will face a tough time getting a low-interest rate personal loan from banks. Always use a personal loan calculator to determine your potential EMIs.
• Build Your Credit Score
Your credit score reflects your repayment track record and how punctual you were in clearing off older loans. Most banks demand a credit score of 750 and above before approving a personal loan application. A credit score below 750 indicates that you’ve delayed your previous loan repayments/credit card bills, or you might also have defaulted. Before applying for a personal loan, thus, work to increase your CIBIL score by staying ahead of all your repayments, whether for existing loans or credit cards.
• Provide details of all your income sources
If you have multiple incomes (job, freelance work, rentals etc.), you must declare the full details of each income source. This will enable the bank to sanction a loan amount depending on your total income from all sources. Multiple incomes are viewed favourably by banks when sanctioning personal loans at the lowest interest rates.
• Don’t opt for multiple loans simultaneously
Multiple loans are a shortcut to financial disaster. Multiple loans affect your personal loan eligibility and diminish your chances of getting one at a low-interest rate. This is because managing repayments for several loans increases your debt-to-income ratio and reduces your repayment ability. Banks and lending institutions consider such candidates a bad investment and usually reject such applications outright.
A personal loan eligibility calculator is a terrific tool that clarifies what you need to do to avail yourself of a personal loan at the lowest interest rates. Your loan repayment capacity is based on your monthly/annual income and the loan's interest rate. A personal loan calculator or EMI calculator also lets you play around with various interest rates and tenor options and arrive at a suitable combination for your financial situation. Remember that the longer the tenor, the more the total interest accrued, while the shorter the tenor, the higher your EMI amount.
When it comes to availing of hassle-free finance, you can avail of a Bajaj Finserv Personal Loan and get a sanction of up to Rs. 25 lakh. What’s more, you can get the approval in minutes after meeting the simple eligibility criteria of the lender. Before applying, use the Bajaj Finserv Personal Loan EMI calculator to get the necessary insights on how to borrow efficiently.
This content is distributed by Bajaj Finserv. No TNIE Group journalist is involved in the creation of this content.