Personal Loan Eligibility Criteria

The table given below details some of the basic eligibility requirements for obtaining a personal loan in India:

Factors Affecting Personal Loan Interest Rates

When you make repayments for a personal loan, you are required to pay a certain amount of interest as a part of your EMI payments. This amount depends on the interest rate you are charged for the loan. Given below are some of the factors that affect your personal loan interest rates:

• Income

  Your income is the basic component of what determines your personal loan interest rate. It is viewed as the universal truth that financially sound people with higher disposable income have a better repayment potential than people with lower income. Usually, people with higher and more stable incomes receive the lowest interest rates on their personal loans. On the other hand, people with bad financial histories are more likely to get higher interest rates.

• Credit History

  Credit scores play a crucial role in your personal loan approval. In the case of personal loans, it not only determines your eligibility but also affects the loan interest rate. Usually, credit scores are a reflection of the financial history of the individual in terms of existing debt, income, repayment history, and borrowing pattern. A higher credit score increases the lender's trust in the borrower's financial behaviour, even granting them loans at lower interest rates.

• Employer's Status

  Since personal loans are generally unsecured lines of credit, lenders verify a number of factors that establish the borrower's creditworthiness. Your employer or the company you are employed in plays a key role in it. This is because applicants being employed by a reputed organization are viewed as being more financially stable and capable of making timely payments. Such applicants may also get better lending terms and conditions.

• Debt-to-Income Ratio

  Let's assume that the applicant is employed in a renowned organization and earns a high salary, but the majority of the applicant's income is diverted towards debt repayment. In such cases, the volume of the existing debt is sure to have an adverse effect on the personal loan interest rates.

  A debt-to-income ratio can basically be defined as the ratio of all existing debts divided by the total income. Having a high debt-to-income ratio generally means that the applicant is already under high repayment debt, and the lender may charge a higher interest rate.

Documents Required for a Personal Loan Application

We at Urban Money are dedicated to making your loan disbursal process as easy and smooth as possible. You will need to submit a few documents to complete your loan application process. The process is not very paperwork intensive, however, the documents differ for salaried and self-employed individuals. Let's take a look at the documents required for both these cases:

Common Documents

Given below are some of the common documents required for completing a personal loan application:

• Identity Proofs: Voter ID, Passport, Aadhaar Card, Driving License.
• PAN Card.
• Signature Proofs: PAN Card, Passport, etc.
• Address Proofs: Ration Card, Rent Agreement, Passport Copy, Aadhaar Card, Utility Bill, Voter ID Card.
• Bank account statement from last six months.