Published on Aug 19, 2021Updated on Dec 1, 2023
In today’s world, you can apply for a personal loan easily and quickly. If you are applying online, you can do it in minutes. But lenders would approve a personal loan application based on certain criteria that are laid out. Since a personal loan is an unsecured form of borrowing, the lender’s assessment of the borrower’s repayment capability is crucial. This is to ensure that people do not default on repayment.
Here are 5 personal loan factors that could help you get the best interest rates and speed up your application. These critical personal loan approval factors ultimately affect your ability to repay your EMIs. These 5 personal loan factors make up your financial profile and lenders take them into consideration, among others, before approving your personal loan application online.
Your credit score is extremely crucial in the approval of your personal loan. It helps lenders understand your repayment track record and experience with managing debt. So your credit score depends on how you have managed your credit in the past. The thumb rule is that the higher the credit score, the better are your chances to get your loan approved. If you have a clean repayment history devoid of any repayment defaults, it is preferable to the lender. There are specialized bureaus that lenders seek information from to assess your creditworthiness, such as CIBIL, CRIF Highmark, etc. Multiple aspects are measured such as - the amount of debt you have accrued over years, what has been your repayment track record, how frequently you paid your EMIs, whether or not such EMIs if any - were paid in full, etc. Lastly, another important check is also if any EMIs were missed in the past.
Your work experience and current employment gauge if your income is steady or not. A stable job means that there is regularity in your stream of income. Lenders also look into the entity you are employed with. The overall objective is to ensure that your employer is financially sound. This assures them that your source of income is reliable. Your profile has a lot to do with the decision. If your profile is stable, you can probably get a lowest interest rate on a personal loan. Another factor could be the number of years of work experience you have. If you have a long work experience, it could be further useful in reducing the rate. Overall, the stability and designation of your job matter the most.
Your age is an important factor as it gives an insight into your financial stability and earning ability. In your early 20’s, you may not have acquired the financial stability though you have enough time to earn. After 20 to 25 years of employment, the earning window becomes smaller. Hence lenders require you to be within an age where you have certain work experience, which is indicative of your financial stability. Lenders also prefer that your age shouldn’t exceed 65 years by the time of loan maturity.
Your monthly inflow of funds is an important part of your financial profile. Your earnings are directly linked to your ability to repay the personal loan. When you provide your income details to your lender, it would be advisable to show additional sources of income. These could comprise leased out properties, spouse’s salary, business income, etc. Lenders will be thus assured of timely repayment of your dues. Your existing monthly debt obligations, source, and duration are taken into account. Your repayment capacity is the most important factor, which brings us to the next point.
You could also choose a shorter repayment period and have a better chance of getting the personal loan approved at a low-interest rate. However, your repayment tenure shouldn’t be overly ambitious - the EMI amount should be something that is easily adjustable within your monthly budget. Use a personal loan EMI calculator to determine the most preferable tenure
SMFG India Credit provides an instant personal loan with easy documentation and meets your personal loan needs seamlessly. SMFG India Credit’s simple-to-use eligibility and EMI calculators are just a click away.
The personal loan eligibility calculator lets you calculate the maximum loan amount you may be able to get as a personal loan after you enter some basic details. This gives you your estimated loan amount for more efficient future planning. Thus, if you need a higher amount, you could choose to prefer a secured loan or invite a family member with a good credit score and stable income to be a co-applicant.
SMFG India Credit’s personal loan EMI calculator provides you an EMI amount, which can help in planning your future monthly outflow. All you need to do is to enter the loan amount, repayment tenure, and rate of interest. The calculator will help you get the EMI amount within a few seconds. Based on the output, you can select an optimum tenure.
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