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Things That A Lender Will Consider Before Your Personal Loan Is Approved

A lender analyses your complete profile before approving your request. Read on to know the factors that may affect your chances!

<div class="paragraphs"><p>Freepik</p></div>
Freepik

A personal loan is an unsecured loan that doesn’t require collateral and is offered with minimal documentation. Even though it is one of the most sought-after options for many individuals, some factors can affect your chances of getting one. Through this post, let’s discuss some points that a lender will consider before approving your personal loan request.

Personal Loan Eligibility Criteria

Before applying for a personal loan, you have to meet the eligibility criteria. Let’s have a look:  

  • Your age must be more than 18 years and less than or equal to 60 years.  

  • Your Nationality should be Indian.  

  • You should have more than 12 months of work experience.  

  • Your salary should be more than or equal to Rs 15,000, and you should be working with your current employer for over six months.  

Important Factors Considered By Lenders 

1. Repayment Capacity: It is one of the most important eligibility for a personal loan. Before approving your request, the lender will carefully examine your repayment capacity. They will consider your current income, history of employment, and the stability of your job and will also take into account your expenses like car loans, student loans or credit card payments etc. They will also look at how much debt you have already borrowed from other lenders and the interest rates on these loans so that they can decide if you are able to repay a new one with a higher rate of interest.  

2. Work Experience: Work experience is another important factor to consider when applying for a loan. If you have been working for a long time, this shows stability and reliability, which are both desirable qualities when applying for loans.  

A lender will be able to see how much money you make from your job, as well as how long you've worked there. They will also be able to see if you can manage your finances on an annual basis by looking at your credit report and financial statement. 

3. Credit Score: A credit score represents the likelihood that you will repay your loan. The better your credit score, the more likely it is that you will get approved for a personal loan. If you have no credit history or are new to taking out loans, lenders may look at other factors when deciding to approve your application for a personal loan.  

4. Income sources: A lender will consider your income from your salary, business, and property before approving a loan. If you have a regular income from the same source for more than 12 months and the minimum salary is Rs 15,000 per month, then you are eligible for a personal loan. 

5. Occupation: Lenders will consider your occupation when approving your loan. They will look at your current and past work experience and what you do for a living. They also consider if you are self-employed or an entrepreneur as it will help them analyse the reliability factor.  

6. Employment History: The lender will want to see a consistent employment history, which is one of the most important factors in considering your loan application. If you are able to show decent employment history, then there’s a good chance that your application will be approved. The lender will also examine your current employer.  

7. Loan Amount: The amount you want to borrow is the first thing that lenders will consider. The loan amount is calculated based on your income and expenses and should be less than the value of your property. If you have significant liabilities, the lender will take this into account when calculating how much they can lend you. 

In conclusion, the factors that a lender will consider before approving your personal loan application are very important. It is essential to fulfilling every important criterion before you apply for a personal loan.