A personal loan refers to a type of unsecured loan which requires no collateral and minimum documentation. The merits of availing of such a type of loan include low-interest rates, multiple uses, and quick disbursements. It is increasingly growing popular to finance home renovation needs and other requirements.
Nowadays, the entire process of opting and availing of online loans is to go 100% digital. To meet the consumer’s needs, all financial institutions have used many different methods. One such is the use of touchless personal loans apps in India. With Fullerton India’s Loan application, borrowers can easily avail these loans online. So, let’s understand the eligibility criteria and the tips to enhance approval on personal loans.
Eligibility Criteria For Availing Personal Loans
All borrowers must first check the eligibility criteria before availing of personal loans. These eligibility criteria are listed below.
To avail of a personal loan, the borrower must be a resident citizen of India.
- Age Limit
Only individuals between the age of 21-60 years can avail of the loan.
- Monthly Salary
Monthly salaries are applicable for only salaried individuals who avail of the personal loan. For individuals residing in Mumbai or Delhi, the amount is ₹25000 whereas, for salaried individuals residing in other parts of the country, the monthly income must be ₹20,000.
Tips for Enhancing Approval on Personal Loans
Financial institutions check various criteria before lending such loans. These include credit score, the income to debt ratio, verification of documents, and availability of collateral to ensure safety during non-payment of the loan amount. These factors enhance the overall approval rates on availing of personal loans. Such factors are explained below.
- Credit Score
A borrower’s credit score is one of the most crucial elements financial institutions evaluate before lending different loans. The repayment history of the borrower influences the credit score. If the borrower’s credit score is lower, it leads to higher interest rates as the risk of lending significantly increases. For ensuring smooth disbursement of the loan amount, borrowers must clear outstanding dues, restrict credit features and consolidate the debts.
- Verification and Submission of Documents
A good CIBIL score and a steady cash flow help the borrower to increase their loan approval rates for personal loans. On the other hand, failure to submit the required documents along with the application form makes the lender think that the borrower is not legitimate. Hence, there is a lower chance that the loan request for personal loans will be approved.
- Income to Debt Ratio
The borrower must always check the minimum salary requirements before they apply for a loan. Usually, the bank statements of the borrowers for the last three months are checked for the computation of income to debt ratio. This ratio determines the amount of lain that the borrower can take. A high income to debt ratio will indicate a significant amount of salary spent on payment of EMI’s of current loans. To increase the chances of approval, the borrower must make sure that their fixed monthly EMI payments are less than 35% of their monthly income.
- Availability of Collateral
The borrower must have arrangements for collateral before opting for loans of higher amounts. This assessment is essential before availing of any kind of loan, including home loans, education loans, and business loans. There is a direct relationship between the availability of collateral and loan amount. Sufficiency of collateral will ensure flexible repayment tenures and lower interest rates. For quick approval on personal loans, borrowers must ensure higher collateral value as it minimises the degree of risk for financial institutions.
- Comparison of Lenders
Multiple financial institutions are offering different loan schemes to borrowers at affordable interest rates. Before opting for a lender, the borrower must always analyse the market and check quotations provided by different lenders. Furthermore, each lender must also check processing fees, terms and conditions, and other charges. This is essential because the borrower has the flexibility to choose the lender who fulfills the loan requirements and thus enhances the borrowers’ eligibility criteria.
Before availing of any loan, the borrower needs to determine the current financial position. This can be done by preparing a budget with future expenditures and income sources of the borrower. It is very imperative to compare and evaluate various loan offers and choose one with flexible interest rates and repayment tenures. With digitalization, borrowers can opt for personal loans through instant loan applications. Moreover, borrowers can now opt for a hassle-free application with Fullteron’s loan application.