Getting a personal loan has become easier than ever before. With simpler eligibility rules, quicker processing and easier application, a personal loan is now available at the click of a few buttons. Though you may be eligible for a loan, you must know how much you are eligible for. You can easily calculate your personal loan eligibility by using a personal loan eligibility calculator online. You can also download a personal loan app and check your loan eligibility for free.
Why you should check personal loan eligibility before applying
When it comes to money, information is power. If you know your personal loan eligibility before you actually apply for a loan, it can make a lot of difference in both the short term and the long run. Look at the key reasons why you must check your personal loan eligibility before submitting the loan application.
- It helps you to decide how much you should borrow
This is the most important and most basic factor to consider. You will have to strike a balance between how much money you need, how much money you can comfortably pay back every month and how much money a lender will lend you as a loan. The best approach is never borrowing more money than what you absolutely need. Also, you must ensure that your monthly EMI fits into your budget comfortably.
- It allows you to determine the loan duration
Depending upon your loan eligibility, you can easily decide the duration of your loan. If you are not eligible for the amount you want to borrow, you can try to get a loan for a longer duration. Similarly, if you find out that you have high loan eligibility, and that you can push a monthly payment, you can choose shorter tenure.
- It allows you to decide who to borrow from
This is another important factor to consider when you are availing a loan. There are multiple lenders out there and you must check who is offering you the best deal. Once you know your eligibility, you are in a better position to negotiate with the lender that interests you.
What kind of data will you need to check your personal loan eligibility?
Different loan eligibility calculator tools will require many different data points. While exact data points will always differ from lender to lender, there are three basic data points that are common to every loan calculator. These data points will always for the three key factors in determination of your loan eligibility.
- Your current income: This will be the single most important factor in determining your personal loan eligibility. Generally, to get a personal loan, you are supposed to be earning a minimum of Rs. 15,000 per month. Understandably there is no higher limit on how much you should be earning to get a personal loan. The more you are earning per month, the higher will be your loan eligibility.
- Your current financial commitments: Your current financial commitments will be divided in two broad based categories. These are your living expenses and the liabilities you have. Most lenders will consider half of your monthly income to be your living expense and thus may not count that for eligibility calculation. From the remaining part, they will see which other liabilities you have including any home loan, automobile loan, personal loan or credit card debt. All these will be considered for your loan eligibility calculation.
- Duration of loan you expect: Finally, the length of time for which you are hoping to get a loan will also be considered. Since longer loan will result in lower EMI amount per month, you will be able to get higher loan eligibility for longer duration loans like those lasting two years or so as compared to single year loans.
How to check your personal loan eligibility?
There are a number of ways to check your eligibility for getting a personal loan. The best way is to use the online calculator or app based personal loan eligibility calculators provided by different lending companies. These calculators are very simple to use. Most of them are essentially a small form where you answer a few questions – generally about your age, income and other liabilities and the eligibility calculator will reveal your eligibility limit. You do not have to do any complex mathematics here. Just feed the numbers and know your loan eligibility in a click.
While the internet is filled with different loan eligibility calculators, the best choice is to pick up the calculator provided by the lender you are most likely to apply to. For example, if you are planning to get the loan from a personal loan app, the app will have a built-in eligibility calculator which you should use. The reason is simple. This calculator will be calibrated and pre-set as per the lending criteria of the app. It will give you the most accurate loan eligibility than any third-party tool which will rely on broad based generalisations and crude estimations.
Remember that if you do not know how much you are able to borrow, your application for loan may get rejected. This can have impact on your credit score. Plus, you will have to go through the entire loan application process again, which can be problematic for the people who are in urgent need of funds. Knowing your loan eligibility can give you a significant leg-up in the process by allowing you to make wise borrowing decisions and also reduce the chances of loan rejection very significantly.