Personal loans are one of the most flexible forms of raising funds as these loans do not come with any kind of restriction on their usage. Whether you have to pay for the medical bills or you wish to go on a world tour, the borrowers have complete freedom to use the personal loans for almost any purpose they wish to. Since these loans are offered without demanding any asset in the form of collateral or security, personal loan eligibility gets majorly affected by your income, credit score, job stability, residential stability, age and overall past payment history. If you fail to meet even any one of these factors, either you will be offered a high interest rate or you will have to face a complete rejection of your application. But a major advantage of taking a personal loan is that the documentation process is quite simple and the funds are quickly disbursed in your account, once you get a green flag from the lender.
The general eligibility criteria and documents required by the lender
• The age of the applicant must be between 22 to 60 years, as per most of the lenders.
• Both salaried and self-employed individuals can apply for the loan, but must reflect a regular and stable source of income.
• The applicant must possess at least one year of work experience to qualify for the loan.
• The applicant must provide all the documents asked by the lender such as Voter ID, Aadhar card, salary slips and residential proof.
How to improve your eligibility for personal loans?
To improve your personal loan eligibility, you can follow the tips mentioned below:
• Maintain an excellent credit history – Since the personal loans are approved entirely on the basis of your creditworthiness, it becomes important for you to get rid of the past debts and liabilities on time.
• Build a credit score of 650 or above – Your credit score is a clear indication of your ability to timely repay the loan, and hence, to effortlessly meet the eligibility criteria, you must maintain a credit score of 650 or above.
• Never simultaneously apply for multiple loans – You should only apply for a loan that perfectly meets your needs. Unnecessarily submitting multiple loan applications can leave a negative impact on your creditworthiness.
• Select a longer repayment tenure – Before agreeing for any repayment structure, you must keep in mind that it is always better to choose a longer tenure as this way, you not only receive proper time to repay, but also the EMI amount gets reduced.
Few advantages of taking personal loans
• No need for security – As mentioned before, you do not have to offer any asset in the form of security to avail a personal loan. In case, you do not make the payments on time, you will face financial consequences, but you will not lose any asset.
• Smooth and hassle-free processing – The overall processing time for personal loans is lower than what you experience in other loans as you are asked to submit a basic set of documents.
• Quick sanctioning of funds – Since the approval process does not involve any asset, the funds are immediately disbursed in your account. Many of the lenders only take a few hours to transfer the money to your bank account.
Undoubtedly, personal loans can offer a range of benefits to the borrowers. To improve your personal loan eligibility, you must maintain a good credit score and a flawless payment history, should select a longer tenure and should not apply for multiple loans, as each one of these factors can greatly influence your ability to qualify for the loan. In addition, you must thoroughly check the details of the loan to lock the best deal for yourself.