Step by Step Guide to Check Your Personal Loan Eligibility

14 Sep 2022

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If you want access to immediate cash without providing collateral, a Personal Loan can prove to be an incredible option. With a Personal Loan, you can fund any expense, be it medical emergencies, a dream wedding, long-awaited vacations or home improvement projects. This article explains the eligibility criteria for a Personal Loan, how you can use a Personal Loan Eligibility Calculator and the measures you can take to improve your loan eligibility. Read on.

Personal Loan – An Overview

A Personal Loan is a sum of money you can borrow from banks and Non-Banking Financial Companies (NBFCs) without providing any collateral. It is an unsecured loan, wherein the lender primarily considers your credit score and monthly income to determine your eligibility. You can repay the loan and the due interest in Equated Monthly Instalments (EMIs), over tenures lasting up to seven years. Also, you can use the loan amount to fund various expenses without worrying about any end-use restrictions, subject to same should not be utilized for any speculative purpose.

Personal Loan Eligibility Criteria for Salaried Applicants

As a salaried individual, you must fulfil the following criteria to easily secure a Personal Loan.

  • Age: You should be at least 21 years old, whereas your age at the time of final EMI repayment should not exceed 60 years or date of retirement whichever is earlier.
  • Nationality: You must be a Resident Indian.
  • Employment: You should be employed continuously for a minimum of 1 year with a multinational company (MNC), educational institution, government company, public sector undertaking (PSU), public or private limited company, or partnership or proprietorship firms.
  • Minimum monthly income: You need to show a minimum net (in hand) monthly income of Rs 20,000 to be eligible for a Personal Loan.
  • Credit Score: You need to show an excellent credit score, usually 701 or more points, to enhance your loan-securing chances.

Personal Loan Eligibility Criteria for Self Employed Applicants

The eligibility criteria for self-employed applicants are slightly different than that for salaried applicants. Below are the requirements.

  • Age: You should be at least 21 years old, and your age at the time of final EMI repayment should not exceed 65 years.
  • Nationality: You should be an Indian Resident to qualify for the loan
  • Profession: You must be a self-employed professional such as a doctor, engineer, chartered accountant, architect, consultant, freelancer, etc., earning a steady income for at least one year with no breaks between jobs. If you are an insurance agent, your business should be at least two years old.

How to check Personal Loan Eligibility?

You can ascertain your Personal Loan eligibility in a few simple steps. You can use a third-party Personal Loan Eligibility Calculator or visit your chosen lender’s website to assess your eligibility. Once you have decided on the lender you intend to approach, you must input these details in the various tabs of the calculator.

  • Enter your net monthly income after all the mandatory deductions.
  • Enter your city of residence or the PIN code.
  • Choose your employer type – whether it is a Government or Private Entity, LLP, PSU, etc., from the drop-down menu.
  • Finally, enter your desired loan amount in the last tab of the Personal Loan eligibility calculator.

Once you have ascertained your loan eligibility, you can even calculate the possible EMI payable against the loan amount.

How to use Bank of Baroda’s Personal Loan Calculator?

Follow these three simple steps to calculate EMI on personal loan amount.

  • Enter the loan amount you need in the first tab, i.e., the 'amount' section.
  • Enter a reasonable interest rate in the 'rate of interest' tab, ensuring it is not below the minimum rate levied by the bank. You can contact your relationship manager to ascertain your eligibility.
  • Enter your preferred loan tenure in the 'Loan terms' tab.

The personal loan EMI calculator will display the monthly EMI amount instantly. You can modify the input values until you arrive at an affordable EMI amount. The EMI amount depends on your chosen loan tenure and the interest rate levied by the lender. Longer tenures typically result in pocket-friendly EMIs, but the interest rate on such loans may be higher.

Features and Benefits of a Personal Loan Offered by BOB

Bank of Baroda offers collateral-free Personal Loans to finance your various cash requirements. Following are the salient advantages and features of Personal Loans.

  • Higher loan amounts: With Bank of Baroda, you can get up to 20 Lakhs as a Personal Loan without pledging collateral.
  • Flexible repayment terms: You can repay your Personal Loan in tenures lasting up to seven years, depending upon age & employment profile of the applicant.
  • Competitive interest rates: Bank of Baroda levies competitive interest rates on Personal loans, resulting in pocket-friendly EMIs.
  • Multi-purpose end use: You can use the loan amount without any end-use restrictions. For example, you can pay for medical emergencies, plan a wedding, take a vacation, buy the latest gadgets, etc.
  • Nominal processing fee: The bank levies a nominal loan processing fee, thus reducing the overall cost of your Personal Loan.
  • Hassle-free application and documentation: You can apply for the loan online and offline. The documents required for a Personal Loan are basic and generally include your PAN, ID, address, and income proof documents.
  • Speedy disbursals: You can enjoy rapid loan disbursals as the bank credits the loan amount directly into your account within a few hours to a couple of days.

How to Improve your Eligibility for a Personal Loan?

Your Personal Loan eligibility depends mainly on how disciplined you have been with your previous debts and whether you can pay off the new debt. The following are areas you can work on to improve your Personal Loan eligibility.

• Maintain a high credit score

When you take on any debt, the lender passes your financial information to credit information bureaus in your country. These companies gather your debt-related data and rank it between 300 to 900. Lenders consider a credit score above 701 as good. A higher credit score indicates that you have been repaying your dues on time. A consistently high credit score increases your chances of availing of a Personal Loan.

• Reduce your debt-to-income ratio

The debt-to-income (DTI) ratio represents the ratio of your total monthly debts to your total monthly income. Ideally, you want your debt to be no more than 25% of your income. A higher DTI means you have lesser funds to repay the Personal Loan, which leads lenders to potentially reject your loan application or charge a higher interest rate. You can reduce your DTI ratio by either paying off your existing debts or increasing your monthly income.

• Pay off your existing debts, and don't send multiple applications

Existing debts can significantly impact your chances of acquiring a new loan. If the lender finds that your income does not indicate your ability to repay your concurrent debts, they may reject your application. In doing so, you may choose to apply with another lender, but your previous rejection impacts the new application. Multiple enquiries, including hard inquiries make you appear credit hungry which lenders consider a red flag.

• Keep a substantial gap between loan applications

If for whatever reason, a lender rejects your loan application, it impacts your credit score. You should thus work to build your credit score again before applying for a new loan. Experts recommend a 6-month waiting period between two loan applications. Six months should give you sufficient time to take measures to increase your credit score.

• Present all your income sources

Your loan eligibility improves significantly if you can show multiple income sources other than your monthly income. You can provide proof of your passive income sources, such as income from investments, house rent, income-generating hobbies, etc. Presenting all your income sources ensures lenders of your repayment capacity.

Need a Personal Loan? Think Bank of Baroda

Personal Loans are an excellent choice when you need cash instantly. These unsecured loans save you the trouble of providing collateral and are easy to obtain. You can apply for Bank of Baroda Personal Loans online from the comfort of your home. You can even visit your nearest Bank of Baroda branch and apply for the loan. Remember to use the Bank of Baroda Personal Loan Eligibility and EMI Calculators for a convenient loan application process. You can also call our toll-free number 1800 5700 for more information on the suite of loan products we offer.

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    The contents of this article/infographic/picture/video are meant solely for information purposes and do not necessarily reflect the views of Bank of Baroda. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Bank of Baroda and/ or its Affiliates and its subsidiaries make no representation as to the accuracy; completeness or reliability of any information contained herein or otherwise provided and hereby disclaim any liability with regard to the same. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Bank of Baroda or its affiliates to any licensing or registration requirements. Bank of Baroda shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

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A Complete Guide to Personal Loan

A personal loan does not require the borrower to provide collateral and so it is an unsecured loan. The purpose or intention of a personal loan is to fund immediate financial contingencies. It could be for business capital, marriage, medical expenses or even foreign trips, though the end use of the capital really depends on the borrower, as long as it is for a legitimate financial need.
Eligibility for a personal loan?
Since these loans are unsecured- at what rate of interest you will get the loan and how much, whether or not you will get the loan-depend on the credit quality of the borrower. If you have good creditworthiness, you are likely to get the loan at an attractive rate of interest. If you have been a long time customer with the bank, with sound track record of financial discipline, you may also get a pre-approved personal loan sanction.
Bank of Baroda lists the following types of employees/self-employed individuals who are eligible for personal loans.

Employees of Central / State Govt. / Autonomous Bodies/ Public / Joint Sector Undertakings, Public Limited Co. / MNCs & Educational Institutions – with minimum continuous service for 1 year
Employees of Proprietorship, Partnership firms, Private Limited companies, Trust - with minimum continuous service for 1 year
Insurance Agents- doing business for minimum last -2- years
Self Employed Professionals (Doctor, Engineer, Architect, Interior Designers, Tech. and Management Consultants, Practicing Company secretaries etc) -- with minimum 1 year stable business.
Self Employed Business persons - with minimum 1 year stable business.

Some of the benefits of a personal loan are
Urgent financial requirement
If there is an immediate need for money, personal loans are the best option. They are considered better than credit cards or loans from family members or unorganized lenders, since the rate of interest is reasonable and the lender is a credible organization. Credit cards come with strict credit limits, which is not the case with personal loans. Funds taken from the bank as personal loan also resolve the issue of certain vendors not accepting payment through credit cards.
Breathing time for repayment
Also, the credit card bills need to be paid off by the due date which generally falls in the next month whereas you get some breather in repaying a personal loan EMI over a period of time, generally ranging from 3-4 years.
Flexibility of use
Funds from a personal loan are flexible in the way you use them. They can be used for several purposes- home renovation, travel, wedding and medical expenses or for any other purpose as per one’s personal obligations..
Loan amount
The loan amount you can borrow under a personal loan is also significant. For example, with Bank of Baroda offer personal loan amounts based on the eligibility of applicants
Confidential
Personal loans may also be private loans since these loans are often used to meet cash requirements or personal contingencies and thus kept private to a great extent.
Flexible repayment structure
These loans are generally of the nature of short to medium term loans and come with a flexible repayment structure.
Easy to get
For example, Bank of Baroda is popular for personal loans that are quick to get, fast processing, minimal documentation required and offered at attractive rate of interests. Most salaried persons, self-employed and professionals can apply for these personal loans.

Loan Against Shares - What You Need To Know

Are you in need of urgent funds? Have you invested a significant sum of money in the stock market? Did you know you can get a loan by pledging your shares? Yes, you can take out A Loan against Shares, a type of secured loan where your shares act as collateral. Lenders typically offer a high loan amount, levy competitive interest rates, and provide flexible repayment tenures. Plus, you only have to pay interest on the loan amount you use and not the entire principal loan amount. Read on to know more about what shares are, how to get a Loan Against Shares, the importance of a DEMAT account and how you can open an online DEMAT account.

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