The role of a Personal Loan eligibility calculator in finding the right Loan

[Abhilash Rathore]

We live in an era where financial flexibility is more important than ever. By helping individuals manage various expenses, from medical emergencies and education to weddings and travel, Personal Loans are an invaluable financial tool. The first step in securing a Personal Loan is determining your eligibility, which varies between lenders.

A Personal Loan eligibility calculator is an online tool that helps you estimate the maximum Loan amount you can borrow based on age, net monthly income, employment type, existing financial obligations, and other factors. This initial assessment lets you explore suitable Loan options confidently without the risk of harming your credit score from hard inquiries during the Loan application process.

Understanding Personal Loan eligibility

Applying for a Personal Loan without checking the eligibility criteria of your chosen lender results in your application being rejected. Multiple rejections may negatively affect your credit score and future borrowing potential. Therefore, familiarise yourself with the benchmarks used by lenders so you can better prepare for the Loan application process.

Several factors affect Personal Loan eligibility, including income, credit score, age, work experience, and existing liabilities. Let us discuss them in detail:

Income

A stable source of high income, such as a salaried job in a reputed organisation, can increase your approval chances and lead to more favourable Loan terms, as it indicates financial stability. If you are a salaried individual working in Mumbai and Delhi, you must have a minimum income of Rs. 25,000. For other cities, the income threshold is Rs. 20,000.

The criteria differ slightly for self-employed individuals. Lenders consider your minimum annual turnover and yearly profit after taxes according to the nature of your profession or domain of work.

Credit scores

Your credit score is an indicator of your creditworthiness. A higher score indicates more responsible credit behaviour and can lead to lower interest rates. All salaried and self-employed individuals should hold a credit score of 750 and above to get a good deal.

Age

Both self-employed and salaried individuals should be resident Indians aged between 25 and 65 or 22 and 65, respectively. Younger applicants may have higher eligibility as they earn more years and may qualify for higher loan amounts, depending on other factors.

Work experience

The longer you have worked in your current job, the more reliable lenders may think you are. All salaried employees should have a total work experience of one year, with six months of completion at the current workplace. Self-employed individuals should have a business existence for at least three years.

Role of Personal Loan eligibility calculator

The Personal Loan eligibility calculator is a simple and helpful tool available online. It gives you an instant estimate of your eligible Personal Loan amount. Select whether you are applying as a salaried or self-employed individual. Choose the annual interest rate, starting at 13% per annum, and the period you plan to repay the Loan, which can range from 12 to 60 months.

The Personal Loan amount you are eligible for is displayed on the right side of the screen. You can adjust the interest rate and tenure according to your preference and compare different scenarios.