How Is Personal Loan Eligibility Calculated?
Personal loan eligibility is primarily determined based on factors such as your repayment capacity, credit score, age, employment status, and existing debt obligations. Your credit score plays a crucial role, as a score above 750 increases your chances of approval. Lenders also have minimum income requirements, which may vary depending on the location and applicant type. A stable employment history is also an essential consideration.
These conditions may vary slightly between lenders and based on whether the applicant is salaried or self-employed.
Personal Loan Eligibility Criteria
Let us take a look at what is the eligibility of a personal loan for salaried and self-employed individuals:
|
Factor |
Salaried Individuals |
Self-Employed Individuals |
|
Age |
Between 22 and 65 |
Between 25 and 65 |
|
Nationality |
Indian |
Indian |
|
Credit Score |
750 or above |
750 or above |
|
Work Experience |
1 year; the applicant must be employed at the current workplace for at least 6 months |
Applicant’s business must have been in existence for at least 3 years |
|
Minimum Income |
INR 25,000 for Delhi/Mumbai residents; INR 20,000 for any other city in India |
Minimum annual turnover and yearly profit after taxes according to the nature of profession or domain of work |
|
EMI as a Fraction of Income |
Maximum 60% - 70% of the monthly income |
Maximum of 65% |
Benefits of a Personal Loan Eligibility Calculator
The calculator offers a quick and convenient personal loan eligibility check for applicants before borrowing. This saves considerable time and effort while comparing multiple lenders for the best loan options.
By adjusting factors such as net monthly income and existing financial obligations, applicants can assess their chances of approval and make informed financial decisions.
Most importantly, using an eligibility calculator can help avoid multiple loan applications, which could negatively impact credit scores due to repeated hard enquiries by lenders.
Factors Affecting Personal Loan Eligibility
From age and income to work experience and credit score, several factors affect personal loan eligibility. Let us take a look at them in more detail:
- Income: This is one of the most important personal loan eligibility criteria as lenders assess your income to ensure you can repay the loan. A stable source of high income, such as a salaried job in a reputed organisation, can increase your chances of approval as well as lead to more favourable loan terms as it is an indicator of financial stability.
- Credit Score: Your credit score is an indicator of your creditworthiness. It is calculated using your borrowing history and behaviour. A higher score indicates more responsible credit behaviour and can lead to lower interest rates.
- Age: Different lenders have different age requirements and ranges. Younger applicants may have potentially higher eligibility as they have more earning years and may qualify for higher loan amounts depending on other factors.
- Work Experience: Greater work experience can indicate better job stability. The longer you have worked in your current job, the more reliable lenders may think you are. This can make them more confident in your ability to repay the loan.
- Existing Liabilities: Existing debts or liabilities can raise your Debt-to-Income ratio, which should ideally be below 30%. A higher ratio can indicate less disposable income for a new loan, which can lower your approval chances or limit the loan amount.
How to Use the SMFG India Credit Personal Loan Eligibility Calculator?
Our online personal loan eligibility calculator is a simple and helpful tool that gives you an instant estimate for your eligible personal loan amount. Here’s how you can use it:
- Select Your Employment Type
Select whether you are applying as a salaried or self-employed individual. It is important to choose the appropriate option as the age and minimum income requirements differ for both categories, which can impact your personal loan eligibility and the amount that can be borrowed. - Enter Your Age
You have to be at least 22 years old when you apply for a loan (25 if you are self-employed) and a maximum of 65 years of age at the time of loan maturity. This age range ensures compliance with loan policies and repayment capacity over time. - Select Your Net Monthly Income
Your net monthly income is the take-home pay after taxes and other deductions have been subtracted from your gross monthly income. If you are self-employed, please select your yearly profit after taxes. These details directly influence your personal loan eligibility and repayment ability. - Select Your Net Monthly Obligations
This refers to the total amount of monthly payments you make towards existing debts such as home/car loans, credit cards, and any other financial commitments. Please make sure that this amount is accurate as it can significantly affect your personal loan eligibility and the amount you may qualify for. - Select the Interest Rate and Loan Tenure
Choose the annual interest rate, starting at 13% per annum*, and the period over which you plan to repay the loan which can range from 12 months to 60 months. Please note that the final interest rate will depend on several factors including SMFG India Credit’s policy at the time of loan application. - View Your Eligible Loan Amount
You will be able to see the personal loan amount you are eligible for on the right side of the screen. You can adjust the interest rate and tenure as per your preference to get an idea of different scenarios. Once you are satisfied with the personal loan eligibility check, you can proceed with the loan application.
Conclusion
It is important to understand personal loan eligibility before you apply for a loan. By considering factors such as income, age, and existing liabilities, you can better assess your borrowing capacity and make informed decisions that do not strain your finances.
SMFG India Credit’s free-of-cost, easy-to-use personal loan eligibility checker simplifies this process by providing an instant estimate of the loan amount you may be eligible for. By trying out different interest rates and tenures, you can arrive at the loan option that aligns with your financial goals and obligations.
Our dedicated support team can further help you find the right loan option for you. Check your personal loan eligibility, make sure you have the necessary documents and apply online today! You can also check out our personal loan EMI calculator to foresee your monthly payments and manage your finances better.
* Please note that loans are disbursed at the sole discretion of SMFG India Credit. Final approval, loan terms and disbursal process will be subject to SMFG India Credit's policy at the time of loan application. If you are an existing customer and wish to foreclose your loan, please note that foreclosure terms and charges will be applicable as per our policy at the time of loan foreclosure.
