How to Calculate your Personal Loan Eligibility? (and Increase It)

Whether it is paying bills for a medical emergency, paying for the dream family holiday, or planning a big fat wedding, personal loans are your best bet to get rid of all the apprehensions. Even though a personal loan is an unsecured form of credit provided by financial institutions without collateral, the borrower must fulfill specific eligibility requirements to get the loan sanctioned instantly.

While financial institutions such as Fullerton India provides instant personal loan online without stepping foot outside, a person should calculate the personal loan eligibility depending on multiple factors such as age, monthly income, credit history, etc. One can quickly compute the equated monthly installments (EMIs) with the repayment period, rate of interest, and borrower’s remaining years of service. Additionally, there are several ways to increase loan eligibility, including clearing previous debts and opting for longer tenures.

Please scroll down to know in detail about calculating your loan eligibility as well as the techniques to increase it.

Eligibility for a personal loan primarily depends on the candidate’s age, employment, and monthly income.

Candidates can easily calculate their loan amount eligibility depending on their net available income. A financial institution offers a personal loan up to 60 times the candidate’s net monthly income (not the actual income).

Upon assessing the various components of monthly salary, a candidate can easily calculate the net monthly income.

• Deducting the PF and Income Tax amount from the overall salary gives the net monthly income. 
• Net monthly income also does not include the leave & travel allowance (LTA) and medical expenses offered by the organizations. Hence, the candidate also needs to reduce it from the net monthly income for the final considerable amount.
• In case the candidate has additional liabilities such as external borrowings and existing loans with outgoing EMIs, they will also be deducted to calculate the net available income.

Usually, the institutions restrict the EMI to 40-50% of the net monthly income. Therefore, one can easily calculate the eligible loan amount depending on the net available income.

Ways to Increase their Loan Eligibility

While your age, fixed monthly salary, and work experience are the major factors influencing the personal loan eligibility criteria, several other parameters increase the loan’s chances of availing.

• Credit Score – A good credit history validates your ability to handle the debts, thereby making you an eligible candidate for a personal loan. Therefore, maintaining a healthy CIBIL score of 750 or more by paying the existing EMIs and credit card bills on time is a great way to increase your chances.
• Repayment Period – Even though longer tenure for repaying the loan is directly proportional to the outgoing interest amount, one can opt for an extended repayment to increase their loan eligibility. Financial institutions such as Fullerton India offer instant personal loans to candidates with a longer possible tenure based on their remaining years of service.
• Joint Loan – Another vital factor that could improve your chances of getting a loan is applying jointly with your spouse/ parent/sibling. A joint loan means higher net available income, which boosts your repayment competency, thereby helping you with the cause.
• Employment Type – The nature of employment can also affect the chances of acquiring the loan. The loan-providing institutions view a government employee or a salaried professional working for a renowned organization or MNC as a steady job holder with a regular income source, which might help you get the loan more quickly.
• Include your Incentives – Increasing the net available income by providing the necessary proofs of certain expenses that your employer is handling is also beneficial for making a personal loan. The costs or perks may include performance variable, additional bonus, overtime incentive, vehicle or fuel charges, telephone and internet cost, etc.
• Step-Up Loans – Some financial institutions offer you small EMIs at the start and increase them over time, along with the surge in the borrower’s net monthly income. Commonly known as step-up loans, you can check with the lender and apply for them to increase your eligibility.