NBFCs have made personal loans easily accessible these days with online application procedures. Many have easy eligibility criteria, minimal documentation requirements, and flexible repayment terms to keep things easy for the borrowers. However, they look at several crucial factors while evaluating loan applications, including the following:

• Age: The applicants should be in their prime earning years at the time of personal loan application, preferably not at the beginning or end of their career.
• Income: Lenders want to ensure sufficient monthly earnings to support timely EMI repayments.
• Employment: An applicant who changes job frequently is a high-risk borrower for the lender. So, they prefer borrowers with a steady job, regular income, and enough work experience.
• Credit Score: A credit score indicates an applicant’s repayment history and past credit behaviour. Most lenders expect a credit rating of at least 700-750. Applicants with a high credit score often get a high loan amount with a lower personal loan interest rate.
• Financial Obligations: Even if the income is high, the borrowers may miss payments if they have several other expenses to cover each month. Lenders usually prefer applicants with a debt-to-income ratio of less than 30-40%.
• Savings: Circumstances may change, and the borrowers may find themselves unable to pay the EMIs. Incidents like job loss, death, or divorce may cause a financial crunch, forcing the borrower to default on a loan. Therefore, lenders want to ensure enough savings to support EMI payments during challenging times.

These are a few crucial factors lenders check while evaluating a personal loan application. Look at them carefully and improve your eligibility while keeping these points in mind.

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