Calculating the loan amount you are eligible to get is an important step that you must take to ensure a loan approval. A personal loan eligibility calculator requires you to enter your monthly income and EMI you can pay. Based on these two data, it provides you with an estimate of the loan amount that you can apply for so that it does not get rejected.
Apart from the loan amount, there are several other factors that financial institutions take into consideration to approve a loan application.
5 Factors to Know Before Using a Personal Loan Eligibility Calculator
Below are some of the factors that an individual must be aware of regarding personal loans before they move on to calculate their personal loan eligibility:
Generally, the minimum age to apply for a personal loan is 21 years. However, if your age is closer to the retirement age, it becomes difficult to get loan approval. Nonetheless, even if you get approval, you will not enjoy the benefit of flexible loan repayment tenure. This is mainly because you do not have many earning years left. Financial intuitions generally do not approve of extending the loan tenure beyond retirement age to prevent default.
Your credit score reflects how well you have repaid your previous loans and how strategically you manage your finances. Since personal loans are unsecured forms of loans, a good credit score is extremely important to prove to financial institutes that you’re a creditworthy candidate. Also, they can approve a high loan amount if you have a good credit score.
To be eligible for a personal loan, an individual must be salaried or self-employed. However, for salaried individuals, there is a minimum salary that an individual must earn every month to apply for a loan. Additionally, there is an employment tenure that they must fulfil.
Self-employed individuals, too, must receive an annual remuneration more than that is set by the financial institution. Also, you must consider if you have a business vintage or business experience that is needed for the approval of your loan.
Income proof or pay slips are essential documents that they must submit during the application process to justify their income. If there are any discrepancies in these documents, then there stands a high chance of loan rejection.
City of residence
The monthly income of an individual greatly depends on the city in which an individual resides. For metropolitan cities, the income is generally more as the expenses are extensive compared to other cities.
Hence, for residents of these cities, the income cut-off is generally kept high. So you must check the income cut-off as per the city in which you reside. This will help you to decide rightly if you are eligible for a personal loan.
Financial institutions review your debt-to-income ratio stringently. This is so because they believe that if an individual already has a lot of loans or debts pending, then it would be difficult for them to pay their monthly instalments. Thus, they would have to chase them or constantly notify them about their EMIs. To avoid such a situation, financial institutions conduct a thorough evaluation to determine eligibility of applicants depending on their income and expenses.
Steps to Use Personal Loan Eligibility Calculator
You can use a personal loan eligibility calculator in the following steps:
Step 1: Navigate to the official website of a financial institution
Step 2: Browse to the personal loan section
Step 3: Open the personal loan eligibility calculator tab
Step 4: Choose if you are a salaried individual or a self-employed individual
Step 5: Adjust the pointers to enter the net monthly income and monthly EMI
Step 6: Apply for the loan if you find yourself eligible
Types of Personal Loan
Personal loans are an extremely popular choice among youths due to their no end-use restriction, zero collateral requirement and easy application process. However, based on their end–use, there are different types of personal loan, which includes:
- A wedding loan to cover unforeseen marriage expenses.
- A home renovation loan to give your abode a new look.
- Travel loan to satisfy your wanderlust.
- An education loan to support your child’s higher education aspirations.
- A festival loan that would help you in a grand celebration of your favorite festivals.
- A medical emergency loan to cover urgent medical expenses.
- Mobile or laptop loan to ease your official task.
A personal loan eligibility calculator is extremely accurate, quick, free of cost, easy to use and reliable. Hence, it is a must to check your personal loan eligibility to avoid rejection of your loan approval.