How to Check Maximum Loan Eligibility for Personal Loan?

A personal loan can solve all your financial worries. Most of the personal loans are unsecured and you do not have to pledge any assets as collateral to secure a loan. This is why personal loans have gained huge popularity in recent years. With a personal loan, you can pay for your last-minute wedding expenses, get medical treatment or pay for your child’s education.

Because of the advancement in the Internet and Technology, every business is now online. So, you can apply for a loan online, right from the comfort of your home.

Personal loan eligibility criteria

Certain eligibility factors are taken into consideration by lenders before qualifying you for a personal loan. While the eligibility criteria differ from one lender to another. Let us check out some of the factors:

• Credit score - A 3 digit number usually between 300-900 determines your creditworthiness. Your

credit score also depicts information on how you have handled your past debts and whether you repaid the loans you have taken on time. This score is calculated by the credit bureaus.

If your score is less than 600, then it is considered as poor/bad credit score and a score of 800 and above is considered an excellent credit score. The better are your chances of getting approved with a personal loan when you have a good credit score.

• Age - Many banking and non-banking financial companies (NBFC) offer personal loans for the age group of 18 years to 60 years.
• Employer reputation - Both salaried professionals and self-employed individuals can apply for a personal loan. But the parameters differ as few lenders only offer personal loans to salaried employees only. Because it is the job stability and the repayment capacity which is most prefered by a lender, and salaried professionals working in renowned organizations can manage.
• Professional experience - Many lenders qualify individuals for a loan if they have good professional experience of working with an organization for quite a few years. In the case of self-employed individuals, a lender expects you to get a stable income source every month in order to qualify him/her for a personal loan.
• Minimum income - Typically, lenders expect the minimum monthly income of an individual around INR 8,000, though it may differ from lender to lender. In the same way, there are certain criteria for self-employed individuals too. A gross annual income of INR 5,00,000 is needed to qualify for a personal loan and of course, this again differs from lender to lender.

How to check the maximum loan eligibility?

There are two main ways to check your maximum eligibility for a loan using which a lender can approve your loan request based on your repayment capacity.

• Fixed Income to Obligation Ration (FOIR) method - FOIR is a parameter which many lenders utilize to calculate your eligibility for a loan. FOIR considers all your fixed obligations into account that you are supposed to meet regularly on a monthly basis such as EMIs, debt obligations etc. However statutory deductions such as taxes, investments, insurance or recurring deposits are excluded. So, if you exceed more than 50% of your take-home salary, then your loan request will be rejected.
• Net Monthly Income method - Few lenders fix the maximum loan amount using a multiplier applied on your Net Monthly Income (NMI). Your eligibility for a personal loan amount can go up to 30 times your NMI. So if your loan applied exceeds the NMI, then your application is rejected.

Why choose NBFCs?

To get your loan approved quickly, applying for a personal loan with an NBFC is the best option. Vivifi India Finance Private Limited is an NBFC with its loan offering product called FlexSalary offers loans only to salaried professionals.

With FlexSalary, your loan application is quickly processed and your loan eligibility is promptly determined. You can apply for a personal loan from a minimum amount of INR 4,000 to a maximum amount of INR 2,00,000. Irrespective of the location, you will be approved instantly on the same day you have applied.

I am a free lance writer an mostly write on loans related topics