What are the eligibility criteria for a personal loan?

Posted by rupesh on November 28th, 2018

Any person can face financial difficulties at any given time. Thus, in those times, rather than asking for financial aid from family and friends, it is better to approach a financial institution. It will not only help you save face in front of your close ones but also help you understand financial responsibility. There are a number of financial institutions that have started providing short-term loans to help you with your financial exigencies. Thus, you can make use of them and relieve all of your monetary problems. The best thing about opting for a personal loan through a bank or an NBFC (non-banking financial company) is that they charge lower interest rates than traditional financiers and loan sharks.

The various benefits of opting for a short-term loan are here as follows:

• A personal loan is unsecured in nature. You can make use of it to finance all of your monetary needs; as long as they are legal. You can pay for your wedding or those unprecedented medical bills. You can also avail the loan amount to fund your last-minute trip expenses.
• The repayment of these loans is done in the flexible form of EMIs (equated monthly installments). This helps you to plan out your future repayments in advance and manage your funds wisely. The financial institutions also give out various tools such as an EMI calculator to ease your loan repayment process.
• Unlike the normal loans where you have to provide collateral to the banks and NBFCs (non-banking financial companies), a personal loan is unsecured in nature. Therefore, there is no need for you to give any form of collateral.
• The financial institutions have also started providing online loan services. You can make use of these services from the comfort of your house or even when you are on the go; however, you need to have a good internet connection and an appropriate electronic device. The different devices that you can make use of are computers, laptops, tablets, smartphones, etc.

However, there is certain eligibility criteria that you need to fulfill to make use of these loans. The eligibility criteria given out by financial institutions are here as follows:

• These loans don’t require any form of collateral; thus, the financial institutions check your income source thoroughly. Therefore, make sure that you have a stable source of income before applying for these loans.
• The financial institutions also scrutinize your credit history. Your credit history is the reflection of your financial transactions. Thus, ensure that you pay all of your previous as well as current debts.
• Your credit score also plays an equally important role. Your credit score is given out by CIBIL and is based on your financial activities. The CIBIL score range is from 300 to 900 and anything above 700 is considered to be a good score.
• Make sure that you have all the required documents to avail a personal loan. The different types of documents that you need are your employment details and your identity documents.

Hope this article will help you clear all your doubts. Good luck and all the best!