5 Factors That Affect Your Personal Loan Eligibility

Tanya Khanna is a salaried employee at a reputable organisation. She has been working from home since the COVID outbreak. The onus of household expenses fell on her within a few months of lockdown as her husband lost his job. However, recently, due to some unexpected expenses, she is finding it difficult to manage the household spending and is frequently using her savings and investments to meet the family's needs. Therefore, to relieve Tanya of the additional financial strain, her husband recommended availing of a personal loan. Tanya, on the other hand, is only aware of the advantages and eligibility for a personal loan; she is completely unfamiliar with the factors that influence her personal loan eligibility. If you too can relate to Tanya, then this article is for you. Here’s all you need to know about the top five factors that affect personal loan eligibility.

Factors That Affect Personal Loan Eligibility

1: Your Age 

When applying for a personal loan, the most important eligibility condition is that you fit in the age bracket set by the lender. Age is a crucial consideration because it provides lenders with information about your financial stability and earning potential. You may not have the necessary financial stability if you have just graduated and are in your early twenties. Similarly, if your age is above 60 years or you are nearing your retirement, your earning potential gets decreased during this period. In most cases, the financial institutions consider applicants whose age is between 25 years and 55 years. The age factor differs from one lender to another. 
 
            Also read: 5 Brilliant Ways to Avail a Personal Loan with a Low Credit Score
 

2: Your Monthly Income 

Your ability to repay the loan is closely tied to your income. Your income is an important aspect of your financial profile. However, the minimum income requirement varies from lender to lender. While evaluating your income, your lender considers the city you live in and the company you work with. Although the lender considers the primary source of income, having an additional income from passive sources such as renting out your property or leasing land can be beneficial. Having a secondary source of income may reassure lenders that you will pay your EMIs on time.