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The table given below summaries the basic eligibility criteria required by most banks and NBFCs for individuals requesting a personal loan:

Do's

1. Know your credit score before applying for personal loan
2. Research different personal loan offers to get the best deal
3. Read the fine print carefully
4. Pay your loan installment full every month
5. Borrow what you can repay

Don'ts

1. Submitting multiple applications to get a personal loan
2. Going for the first loan offer that comes your way
3. Partially paying your loan installment
4. Missing the due date of your loan installment
5. Asking for a loan amount as per what you want rather than what you need
6. Signing the loan-related documents without properly reading or understanding them

You can apply for personal loans for ‘n’ number of reasons. Some of them are stated as follows:

At the time of financial or medical emergency: Personal loans are disbursed quickly, therefore, they are best suited for financial emergencies. Since they can be used for any purpose, you can avail it to fund big medical expenses.

1.When you wish for less documentation: To apply for personal loans, you require minimal number of documents. Therefore, its documentation process is simpler and faster than many other secured loan options.

2.When you want money to fulfill multiple purposes: If you want money to fulfill multiple financial commitments, apply for personal loans. Unlike for many secured loans,

3.To consolidate your debts: Finding difficult to track multiple loan and credit card EMIs? If yes, you can consolidate them by taking a personal loan. Doing so will not only making repaying debts easier but also will save on the interest amount.

4.When you do not have collateral: If you do not have collateral or do not wish to put your collateral at risk, apply for personal loans as these loans are unsecured, which implies that it does not require collateral.

The approval on your personal loan application depends on various factors. Some of them are as follow:

Credit score: Your credit score reflects your creditworthiness. Therefore, lenders consider it before sanctioning loan application. Higher the credit score better will be your chances of getting the loan application approved.

1.Income: Since, personal loans are unsecured loans, therefore, its eligibility criteria is more stringent than secured loans. Your income will give assurance to lenders that you will be able to repay the borrowed amount without fail. If your income is not sufficient, the lender will not approve your loan application.

2.Employment stability: Stability is yet another important factor which gives lenders an assurance that the borrower will repay the loan on time. If the loan applicant is a job hopper then he/she will not get loan as lender will not have confidence whether the borrower will have steady income to repay the amount on time.

3.Age: Most banks and NBFCs offer loan amount to people between 21 to 60 years of age. The younger you are, the more will be the chances of getting the loan approval.

4.Outstanding debt: Personal loan approval also depends on whether you already have an outstanding debt or not. If you have an outstanding debt, then the lender might reject your loan application or might approve loan of a lesser amount.

Factors that Affect Personal Loan Interest Rate
Different banks and non-banking financial companies offer different interest rates for personal loans. As of now personal loans are available in India from 10.99% onwards. The rate of interest applicable to a specific person depends on various factors.

Some of the major factors are explained as follows:

1.Credit History: Your credit history helps lenders analyse your repayment behaviour. If youhave a poor credit history, you will get personal loan at higher interest rates.

2.Income: For lenders your income is an assurance of repayment. Therefore, the more you earn,lesser will be your personal loan interest rate.

3.Employer: When examining your loan application, lenders also consider the reputation of the organization you work with. You can enjoy lower interest rates on personal loans if you are associated with a well-known and stable organization.

4.Lender-customer Relationship: If you are planning to apply for personal loan with the bank you have an account with, your good relationship with your lender can also help in getting you lower personal loan interest rates.

In addition to the rate of interest, borrowers must also consider other charges such as pre-processing fees, foreclosure charges, etc. before applying for personal loan.