Personal Loan Eligibility

Balancing Monthly Commitments: Benefits of a 7-Year Personal Loan Tenure

Repaying a loan can be pretty daunting for multiple reasons. This holds true especially if you have a short period to repay the debt or EMIs, which can make it difficult for you to meet ends every month.

Whether salaried or self-employed, you must adhere to a strict monthly budget and manage your expenses accordingly, no matter whether you go for a long or short tenure. So it is wise to opt for a long tenure, as it will help you balance your monthly budget effectively.

Read on to explore how a personal loan with a tenure of 7 years can offer you financial flexibility and improve your financial well-being in the long run.

What is a 7-Year Personal Loan?

As the name suggests, a personal loan with a tenure of 7 years is an unsecured loan with low-interest rates- it aims to establish a solid relationship with the provider with its 7-year loan offer.

Normally, borrowers prefer prolonged personal loans, as they offer better chances to meet personal loan eligibility, lower EMIs, and allow maximum time to repay the loan amount and interest charge.

You may have heard of 2-5 year tenured personal loans, but a few elite financial organisations, like Fullerton, have raised the bar and increased the tenure to 7 years to make it easier for the borrowers to repay.

How Can a 7-Year Personal Loan Benefit You?

Here are some reasons why applying for a 7-year long personal loan is recommended for you:

Boost Your Credit Score

If you are a responsible borrower, who repays their 7-year-old personal loan diligently and wisely without missing or delaying any EMI, it will greatly influence your credit rating.

With a higher credit rating, you get benefits like a good loan balance transfer option, lower interest rates, and better deals on future loans or credit card applications.

A 7-year-old loan also comes with an opportunity to establish a sound relationship with the loan provider, which helps you enhance your creditworthiness. It makes future transactions easily accessible through the same financial institution.

Get a Higher Loan Amount Approved

Approval of the loan amount depends on several factors, like employment stability, income flow, and loan tenure. The longer the tenure, the higher the personal loan amount approval. This is one of the key advantages of a 7-year-long personal loan, which can give you a loan amount as high as Rs. 25-35 lakhs.

Fixed Rate of Interest for the Entire Tenure

Another benefit of a personal loan with a tenure of 7 years is that the interest rate remains fixed for the entire tenure. This means that for seven years, whatever interest rate is applied at the beginning of the personal loan remains static throughout the loan tenure.

Lower EMIs

One of the biggest benefits of applying for a long-term personal loan is the reduction of monthly EMIs.

Let’s take an example here. Mr XYZ and Mr. ABC applied for a loan of Rs. 10 lakhs at a 12% interest rate. Mr. XYZ applied for 5 years, while Mr. ABC applied for 7 years.

According to the personal loan EMI calculator, the EMI borne by Mr. XYZ is Rs. 22284, while Mr. ABC has to pay only Rs. 17653 as monthly EMI against his personal loan.

Higher Chances to Meet the Personal Loan Eligibility and Get Approval

When you apply for a 7-year personal loan, you will have a longer relationship with the financial institution. This also means you stand a great chance of establishing a promising bond and faith with the provider.

Approving short-term loans can be difficult because of the high EMI amount. This makes financial institutions sceptical about the repayment capacity of borrowers. So, a high-tenured personal loan stands a better chance of approval.

Conclusion

Financial institutions customize the best personal loan offers for any capital requirement for you based on your needs, preferences, and repayment capacity. The primary motive of offering a personal loan with such a long tenure is to make it easier for you to repay your debt, in lower EMIs, maximum time, with peace of mind.

You can use the personal loan EMI calculator to derive various permutations and compare loan providers.

Also Read:

Looking To Apply For A Personal Loan? Consider Essential Do’s and Don’ts

Personal loans are among the viable financing options. Its features, like multiple-purpose financing, no end-use restriction, and quick disbursement, make it a preference for individuals looking for funding for financial emergencies.  

Do’s and Don’ts While Applying for a Personal Loan 

1. Check Eligibility First: Borrowers must check the personal loan eligibility parameters to understand if they are eligible to secure a personal loan with the lender.

2. Apply for a Suitable Loan amount: A personal loan amount can be as high as Rs 25 lakh with reputed financial institutions. However, you need to determine the right amount of money that is easily repayable without financial burden.

3. Avoid Long-term Repayment Tenure: A long-term personal loan tenure can reduce the loan EMI (Equated Monthly Instalments) with a lower interest rate and increased number of months to spread the principal amount. But, overall, it results in a high cost of borrowing. Therefore, consider a short-term loan and save on total interest costs. It can be between 12-60 months.

4. Choose a Lender with Digital Loan Processing Facility: For easy and quick loan processing, you can approach a lender leveraging technology and allowing customers to complete all formalities digitally, from making an application and documentation to loan disbursal.

5. Avoid multiple loan applications: Multiple loan applications can harm your credit score. With every hard inquiry by lenders, the credit score decreases. Therefore, avoid making a loan application with multiple lenders at the same time. Also, take a break before making another application if one loan or credit card application gets declined. 

Considering these crucial aspects, individuals can obtain a loan without any hassle and financial burden for repayment. Look for lending institutions offering affordable loans following a convenient digital process.

Secure Required Funds Easily: Personal Loan Eligibility and Documentation

Securing a personal loan is always the first choice for individuals looking for instant funds. As per data from Care Ratings, the Unsecured loans segment grew by 140 bps in January 2023 from a year ago. Personal loan processing is quick in the technological era by following a 100% paperless process. Each step – from making an application to loan disbursal – can be completed online. 

Account Assets Audit Bank Bookkeeping Finance Concept

For seamless loan processing, customers should apply after considering personal loan eligibility criteria and documentation as per the lender’s policy. 

Personal Loan Eligibility 

  • An Indian resident aged between 21-60 years 
  • Minimum salary should be between Rs.20,000 – 25,000. 
  • The CIBIL score should be 750+.
  • The applicant should have an overall work experience of more than one year.

Personal Loan Documentation 

Lending institutions leveraging technology for loan processing requires minimal personal loan documents. The set of documents includes: 

  • Identity Proof
  • Address Proof 
  • Age Proof 
  • Latest 3 months’ Salary Slips
  • Past 6 months’ bank statements
  • Form 16 or ITR Acknowledgement 
  • Income Proof

Four Easy Steps to Apply for a Personal Loan Digitally 

  • Provide an active phone number to receive the OTP (one-time password).
  • Enter the applicant’s personal, income, PAN (Permanent Account Number), and bank details. 
  • Enter loan details. The personal loan amount can be as high as 25 lakhs which can be repaid between 12-60 months. 
  • Upload the relevant documents as mentioned above.

This way, customers can apply for a collateral-free personal loan online after checking eligibility with the lender and keeping the required personal loan documents handy. 

Also Read: What You Need to Know About Interest Rates on Unsecured Business Loans in Bangalore

Which Is More Favourable – A term Loan or an Overdraft Facility

Among various credit lines, two are term loans and an overdraft facility. To know which is better or more favourable, borrowers need to know the grounds for both.

Understand Term Loans

As the name is self-explanatory, a term loan is provided for a predefined period, generally 12-60 months, in the case of a personal loan. It can be a short-term loan, medium-term loan or long-term loan. Personal loan instant approval facility is the primary driver for the rising demand for personal loans.

  • Here the borrower receives a lump sum amount sanctioned by the lending institutions.
  • The lender charges interest at a fixed interest rate depending on the personal loan eligibility during the loan tenure.
  • The loan amount is distributed among small EMIs (Equated Monthly Instalments) for easy repayment. The EMI calculation varies with the term or tenure of the loan.

Understand Overdraft

It is a type of loan provided in access to an amount in a savings or current account. It can be defined as a pre-approved credit facility provided to the borrower for a certain period. During this period, the borrower can withdraw the effective credit balance within the sanctioned limit.

  • Unlike term loans, it involves subsequent disbursements on request. It allows borrowers to withdraw funds as and when required during the specified period.
  • The interest is calculated on the amount utilised only and not on the entire approved limit.

Thus, a term loan is suitable for individuals looking for a small buy or meeting business needs using a lump sum amount. In contrast, individuals who want to manage their day-to-day lifestyle needs with flexible withdrawal and repayment options can go with an overdraft facility. Depending on the personal loan eligibility, the loan amount can go as high as Rs.25 lakhs.

Also Read: 10 Rules to Get the Finest Deal for Personal Loan

personal loan eligibility check

Does A Personal Loan Eligibility Criteria Include The Credit Purpose?

personal loan eligibility check

Among several significant benefits of an online personal loan, is the restriction-free use of the loan amount. Your end-purpose of the loan credit does not decide your eligibility for loan approval. 

Eligibility Criteria for Personal Loan

  • Credit Score: Applicant needs a CIBIL score of 750+ for an online personal loan. 
  • Age: The applicant’s age should be above 21 years in the loan application and less than 65 years at the completion date of the loan.
  • Income: 
  1. For salaried: The minimum monthly salary should be Rs. 25,000 in Delhi and Mumbai and Rs. 20,000 for other state residents in India.
  2. For self-employed: Minimum yearly profit after tax depends on profession/industry. 

Meeting these easy personal loan eligibility criteria increases your chances of loan approval.

Usual Purposes of Personal Loans

  • Medical emergencies

Urgent finance is a great help during medical emergencies that can rack up unexpectedly. Opting for a personal loan is the right choice to provide quality treatment to your loved ones instead of losing your savings.

  • Children’s higher education

Here too, if your funds fall short, you can opt for a personal loan. It helps parents to educate their kids in the best institutions.

  • Funding major milestones like the wedding

Easy personal loan eligibility can also be helpful for your child’s grand wedding.   

  • Big-ticket expenses like a world tour 

You need not worry about your dream of a world tour. Finance it with a personal loan and repay the loan in easy installments.

Thus, getting a personal loan is a quick and convenient way to get rid of sudden financial trouble in an individual’s life. It can help you in any financial crunch with easy monthly installments.

Must Read: 5 Points to Keep in Mind When Applying for your First Personal Loan

How To Increase Your Personal Loan Eligibility?

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People, who have a bad credit history or not much of an income to show for their online personal loan application statement can find it hard to get a loan approved. However, there are still things that you can do in order to increase your personal loan eligibility. Here are the important factors on how to increase your personal loan amount.

Factor that Increase Your Personal Loan Eligibility are:

  1. Income Stability – Banks and lenders prefer customers with stable incomes so they would recommend that you think about having extra savings before applying. If you really need a certain amount of cash then prepare yourself financially and show a stable income.  Check your EMIs through a personal loan interest calculator to get more information.

  2. Improve your credit score: Having a good credit history will really help you increase your personal loan eligibility. Getting a secured card and pay all of your bills on time is one way to show lenders that you are responsible with their money.

  3. The Number of Credit Cards: If you have additional credit cards than most banks would prefer people who only have one or two active accounts as this is proof of proper financial management. Showing multiple cards could mean that you’re in debt for the rest of your life and it might be harder to apply for loans in the future.

  4. Whiten Your Credit Report: Whitening your report includes paying down previous debts, keeping balances low or getting them removed from your record entirely if possible. When applying for a new loan, lenders look at your credit history to gauge your creditworthiness.

So improve your eligibility and apply for a personal loan rightaway!

Additional Read: How to Apply for Personal Loan Using Aadhar Card in 2021

How Do Lenders Can Decide Your Personal Loan Eligibility?

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Personal loans help meet urgent financial requirements as they are unsecured and do not require you to keep anything as collateral. These loans help meet individual and business expenses and are perfect for emergencies like medical emergencies, weddings, education, and more. 

What is Personal Loan Eligibility?

If you are looking to availing a personal loan, it is essential to meet the eligibility criteria required by the lenders and financial institutions. The requirements may depend on the lender and might vary, but the basic requirements usually remain the same. You can check your eligibility through the online personal loan eligibility calculator on the website of the lender you have chosen. You can fill in the details, and it will show you the loan amount for which you are eligible. 

Factors Deciding your Personal Loan Eligibility

  • Employment: 

Being one of the most important parameters that the lenders consider to decide your personal loan eligibility, employment plays a crucial role. You must be either salaried or self-employed and have a stable source of income. Lenders prefer to lend loans to people with a regular income as it also makes sure that they can repay the amount. 

  • Credit Score:

Another critical factor that determines your loan eligibility is your credit score, as it shows your creditworthiness. It also showcases your credit history and whether you have repaid the credit amount on time or have defaulted the payment at any time. Your credit score is affected by your outstanding debt, the total number of credit accounts, the credit history length, and more. All this comprises a credit report which is carefully analyzed before lending money. A credit score of 600-700 is considered to be good and viable for you to get a loan.

  • Work Experience:

Your total work experience also plays an essential role while applying for a personal loan online. The lenders check your work experience and prefer that you have worked for at least six months to a year to be eligible for the personal loan. If you have been steadily employed for a long period, it also shows your creditworthiness and makes it easier for the lender to decide. 

  • Age:

Your age plays a crucial part in determining your loan eligibility, and it is essential that you are a minimum of 23 years old and a maximum of 60 years. Most lenders consider this bar with little variations. 

  • Income:

The amount of salary you earn also decides the amount of loan you can get. It is also an essential factor to determine your personal loan eligibility and plays a part in determining if your application will get approved.

  • Documentation Proof:

It is also vital to have all the essential documents, including your age proof, identity proof, citizenship proof, KYC documents, salary slips, and bank statements. Without these documents, there are chances of you not being eligible for the loan, and it might be difficult for your application to approve. 

  • Employment Category:

The companies are classified into categories, and depending on the company’s risk profile; it might be more comfortable or challenging to get a loan. If you are working in a company with a low-risk profile, it might speed up the application approval, and if it is a high-risk company, it might get challenging to get a loan.

Therefore, the factors mentioned above play a crucial role and are considered by the lenders to decide your personal loan eligibility. You must make sure that you meet these requirements before applying for a loan to be eligible. If you fail to meet the criteria, it might get challenging to get approval for the loan. 

Must Read: 5 Tips to Acquire Attractive Deals on Your Personal Loan Interest Rate

How Is Fintechs Making It Easier For Borrower To Procure Loans?

As a borrower, it is advisable to look for loans that offer a lot more than just a decent stash of money. This is why it is advisable to connect with budding Fintechs and NBFCs for getting exceptional deals on personal loans in addition to a host of other rewarding perks:

  • Relaxed Terms of Eligibility

Fintechs realize that every borrower might not be able to fulfill the stringent personal loan eligibility criteria. Therefore, relaxed options, including approval for lower credit scores, lesser reliance on salary slips, and other optional documents, are offered.

  • Quick Approvals

New age Fintechs are known to support the quickest loan approvals. Moreover, a majority of these financial services can be procured over smartphone applications and, therefore, make way for even quicker loan approvals.

  • Customized Limit

A Fintech firm is quick to gauge your credit score, existing income, and other specifics for customizing the instant personal loan limit, as per your eligibility. This aspect or feature minimized downtime worries and subsequent chances of rejection. 

  • Soft Inquiries

Certain NBFCs gauge loan applications with a discretionary point-of-view. Therefore, if the credit score isn’t good enough for a loan, accommodating NBFCs and lenders only send a soft inquiry to avoid any major negative impact on the existing credit score. Moreover, they even allow you to apply after a few months by reassessing your eligibility accordingly.

Modern-day lenders offer these features to prospective borrowers for strengthening their short-term financial stead, sans hassles. 

Additional Read: Here’s How Personal Loans Can Help You to Save Money

Along With Credit Score, Which Factor Also Determines The Personal Loan Eligibility?

A personal loan is quickly becoming one of the most preferred finance types for salaried employees due to their advantages. One of the prime benefits of a personal loan is that it does not require any collateral for pledging and hence the processing is quick compared to other types of loans. 

Which is the most influencing factor for personal loans?

The lending institution will assess the documents required for a personal loan (Check here) , which will contain the income details, credit score and other information for determining the loan eligibility. Many feel that a high credit score will enable a borrower to be automatically eligible for the loan. A healthy credit score is an essential factor but is not solely responsible for the loan approval. Debt to income ratio is also a critical factor for successful support for your loan application. 

What is the debt to income ratio?

Assume that you already have existing loans and your credit score is also high, the lending institution will go through your documents required for a personal loan and analyse your debt to income ratio to process the loan application. In other words, the lender will assess your income breakup to understand the contribution for existing debts, living expenses and then decide your loan amount. Hence you should make sure that your monthly EMI payments are more than 50% of your monthly income.

Conclusion:

You can understand about debt to income ratio better by getting the personal loan contact number of the lending institution and having a discussion with them. Such a practice will help you to secure personal loans quickly.

Must Read: How To Find The Right Personal Loan Lender For Yourself?

How To Get A Personal Loan Without A Job?

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Getting a personal loan can be a daunting task if you are without a job but there are few ways by which you can secure a personal loan even if you are unemployed.

Instead of approaching a financial institution for a personal loan, you can ask your friends and relatives to lend you money on a nominal rate of interest lower than the financial institution interest rate. But make sure to repay the loan amount as per your promised timeline to avoid bitterness with your friends or relatives.

Approach private lenders in case your bank refuses to give your personal loan. Private lenders usually sanction unsecured loans by charging a higher rate of interest as compared to banks. In that case you can get a loan from any lender if you fulfill the personal loan eligibility and have an ideal credit score. 

Take advantage of your credit score with your existing financial institution. If you have taken a loan earlier from your associate financial institution and have repaid it on time without delays, your financial institution will consider your loan application even if you are out of job by taking into consideration your creditworthiness.

If you are without a job, you can also apply for a personal loan against your life insurance policy or by pledging your movable or immovable assets in the form of property or gold jewellery. In this case, the bank’s risk proposition decreases drastically, which helps you get the loan at comparatively cheaper rates.    

Additional Read: Reasons – Why You Should Take A Personal Loan?