Personal Loans have become an increasingly popular financial tool, providing you the flexibility to meet various financial needs. From credit scores and income to age requirements and documentation, this eligibility checklist covers everything you need to know before applying for them.

Checklist for salaried applicants

If you are wondering whether you can Personal Loan apply as a salaried individual in India, the answer is yes. Most banks offer varied eligibility criteria for salaried and self-employed professionals, making it easier for them to avail of finance when necessary. Salaried individuals have a set eligibility:

Age

To apply for a Bank Personal Loan, you must be at least 21 and under 60 years old. Most banks prefer younger borrowers because their repayment abilities are higher, and the chances of defaulting are lesser.

Employment

You should have a stable job with one or two years of experience. Some banks may also consider your employer’s reputation or the industry you work in before sanctioning the Loan amount.

Income

You should meet the bank's minimum income criteria by providing salary slips or bank statements. A high salary means higher disposable income and better repayment abilities. If you regularly repay your Loan, your credit score increases, and so does your Personal Loan eligibility for better interest rates.

Credit scores

A good credit score, preferably above 750, increases Loan approval chances. You can use the banking website or mobile application to apply for a Loan without too much paperwork within minutes. Upon approval, the bank disburses the sanctioned amount to your account. After that, you repay the Loan EMIs with interest every month.

Debt-to-income ratio

Your monthly debt obligations, including the new Loan, should be within a certain percentage of your monthly income. The ideal ratio should be 40% or lower. The lower your debt-to-income ratio is, the better your approval chances.

KYC documents

You need to submit a list of KYC documents to the bank, such as identity proof (PAN Card, Aadhaar, and passport), address proof (utility bills, ration card, and rental agreements), and income proof (last three months’ salary slips and Bank Account statements).

Checklist for self-employed individuals

Self-employed professionals can also apply for Personal Loans. The eligibility requirements are the same as salaried individuals, but with some additional aspects:

Business continuity

Banks often look for business continuity of at least three years or more. Running a business for a more extended period increases your credibility as a borrower and assures the bank of timely repayment.

Income

You must furnish proof of income, such as audited financial statements, income tax returns for specific years, and Bank Account statements.

Conclusion

By understanding these key considerations and using the Personal Loan eligibility calculator, you can increase your chances of getting a Personal Loan from a bank at favourable terms.