How NBFCs validate your personal loan eligibility: Explained
Personal loans are regarded as the most sought after loans in India. Unlike other loans, personal loans do not come with any fixed usage or restrictions so you can use it to fulfil any requirement. Whether you want to renovate your house or to fund your children’s education, you can take a personal loan for any purpose. Both NBFCs and banks offer personal loans to meet the financial obligations of the borrowers. However, personal loans fall under the category of unsecured loans, so banks and NBFCs follow a stringent loan approval process.
The loan eligibility requirements may vary from lender to lender. Usually, all the financial institutions consider the applicant’s monthly income, CIBIL score, age etc. to the loan eligibility. Nowadays, an applicant can submit all the documents online, so there is no need to visit the institution directly. Still, many people are not sure how they can take a personal loan from a bank, an NBFC or an online lender. Hence, we are going to discuss in this article the eligibility criteria to validate a personal loan.
Here are the eligibility criteria of NBFCs for validating a personal loan
Your loan eligibility depends on several factors depending on the organization. The basic eligibility of personal loan in NBFCs is as follows:
Age of the applicant
The applicant’s age plays a significant role in the loan approval process. Generally, people between the age of 23 to 60 years can apply for a personal loan. The younger the applicant, the lower will be his rate of interest set on a personal loan.
To be eligible for a personal loan, you have to be a resident of India. It is an unsecured type of loan, so the NBFCs need to know where the borrower resides. You must submit your address proof documents like Aadhaar card, utility bill, Ration card to be eligible for a personal loan.
The monthly salary of an applicant
All the banks and NBFCs consider an applicant’s monthly income while approving a personal loan. The minimum salary limit may vary from lender to lender. Besides, the minimum salary criteria also may vary depending upon the different cities.
An applicant’s employment status is also a crucial factor in the loan eligibility process. Your job stability determines your loan repayment capacity, so NBFCs and banks mostly ask for a minimum of one year of work experience. One should be employed in an MNC, public or private limited company to be eligible to apply for a personal loan.
A credit score consists of three digits that relate how you repay your loan or debt. Your credit score defines how wisely you have handled your finances. Thus, your credit score is also an essential factor in the loan approval process. To get a personal loan with favourable interest rates, one must have a credit score above 750. Otherwise, a salaried person with a credit score between 600 to 700 is also eligible for a personal loan, but he needs to pay a higher interest rate. Hence, the credit score is not only crucial for your personal loan eligibility but also affects your interest rates.
The following documents are considered by the NBFCs while approving a personal loan:
- You must submit all documents that serve as your proof of identity like a Voter ID Card, PAN Card, Aadhaar Card, passport or driving license.
- You need to provide address proof documents like Ration Card, any utility bill and passport etc.
- NBFCs may also ask for your last few month’s bank statements to check your repayment capacity. You may also have to submit your past six months’ payslips.
If you are planning to take a personal loan from an NBFC, then you need to keep your documents ready and fill up the application form. These points, as mentioned above, may help you to know the eligibility criteria of NBFCs.