We live in an era where financial flexibility is more important than ever. By helping individuals manage a variety of expenses, from medical emergencies and education to weddings and travel, personal loans are an invaluable financial tool. The first step in securing a personal loan is determining your eligibility, which varies from lender to lender. This is where a personal loan eligibility calculator or checker comes into play.
A personal loan eligibility calculator is an online tool that helps you estimate the maximum loan amount you may be able to borrow, based on factors such as age, net monthly income, employment type, and existing financial obligations. This initial assessment allows you to explore suitable loan options confidently, without the risk of harming your credit score from hard inquiries during the loan application process.
Understanding Personal Loan Eligibility
Applying for a personal loan without checking the eligibility criteria of your chosen lender could result in your application being rejected. Multiple rejections may negatively affect your credit score and future borrowing potential.
Therefore, it is important to familiarise yourself with the benchmarks used by lenders so you can better prepare for the application process.
Although various lenders have their own specific requirements, let’s examine the general eligibility criteria for salaried individuals at one of India’s leading financial institutions, SMFG India Credit:
- Age: The age of the applicant should be at least 22 at the time of loan application and no more than 65 by the time the loan matures.
- Nationality: The applicant should be a resident Indian.
- Work Experience: Applicants must have at least 1 year of work experience, including a minimum of 6 months in their current job.
- Minimum Income: Delhi/Mumbai residents should have a minimum monthly income of INR 25,000. For any other location in India, the minimum requirement is INR 20,000.
- Credit Score: You should have a credit score of at least 750, along with a strong credit history.
*Please note that the above are basic eligibility criteria. The final eligibility will depend on several factors including the lender’s policy at the time of loan application.
How Personal Loan Eligibility Checkers Work
As stated earlier, eligibility checkers are valuable tools for those considering securing a personal loan.
Let’s see how to use the personal loan eligibility calculator from SMFG India Credit:
- Access the personal loan eligibility calculator here.
- Choose your employment type, either salaried or self-employed.
- Provide your age in the designated field.
- Specify the following parameters: net monthly income, net monthly obligations, rate of interest, and loan tenure. If you’re self-employed, specify your yearly profit after taxes.
Once you enter this information, the right-hand side of the screen will display the loan amount you may be eligible for.
*Please note that the calculator provides only an estimate and is intended for informational purposes. The actual personal loan amount may differ based on the lender's policies at the time of evaluating the loan application. The calculator results should not be considered a substitute for professional advice or loan sanction.
Tips to Improve Personal Loan Eligibility
Improving your personal loan eligibility can increase your chances of approval and help you secure better loan terms such as lower interest rates. Here are some tips to enhance your eligibility:
- Aim for a credit score of 750 or higher, as it demonstrates responsible borrowing behaviour.
- A higher income can improve your eligibility. Consider negotiating a raise or taking on part-time work or freelancing to supplement your income.
- Aim to keep your Debt-to-Income (DTI) ratio below 30%. Focus on paying off credit cards or existing loans with high interest rates.
- Consider adding a co-applicant with a strong credit profile and stable income to increase your chances of approval and potentially get better interest rates.
- Ensure all your documents are accurate and up to date. This includes income proof, identity proof, address proof, and any other required documentation.
- Each lender has different eligibility criteria. Research and choose reputable lenders whose requirements and loan terms best align with your financial situation.
Conclusion
A personal loan eligibility calculator is a user-friendly tool to estimate the potential loan amount you may qualify for. By calculating personal loan eligibility, you can assess your current financial standing and explore loan options that suit your needs. As every lender has different eligibility criteria, it is essential to check the specific requirements before applying to improve your chances of approval.
*T&C apply. Please note that final approval, loan terms, and disbursement process may vary based on lender policies and borrower’s eligibility.
