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Are You Close to Fulfilling Personal Loan Eligibility Criteria?

A personal loans is an unsecured (without collateral), short or medium-term loan, dispensed to meet urgent financial needs. People may take out a personal loan to meet medical expenses, exotic vacations, for debt restructuring, or any other type of expense where you need money quickly. Unlike mortgages, which are typically taken out for 15-20 years, a personal loan is given for a duration of 1-5 years.

Just like other types of loans, personal loans also have an underwriting process and potential customers are vetted against various criteria, before they are sanctioned a loan. Here are some of the common criteria a person may be evaluated against before a loan is released to them.

The age of the applicant

Most banks and non-banking financial institutions offer personal loans to people between the age of 21 and 60 years. Moreover, if a person is approaching the age of 60, he or she will be sanctioned the loan only for the number of years until 60. For instance, if a person is 58 years old, he or she can get a personal loan only for 2 years.

Debt to income

Before a bank or NBFC will release a loan to a borrower, it will analyze the borrower’s repayment capacity. For instance, a bank will set aside 50% of the applicant’s income for his or her living expenses and consider only the remaining 50% for EMI payments. It should be noted, the 50% considered for EMI covers existing EMI payments, like other loans, including credit card payments.

Employment stability

When you apply for a personal loan with a bank or NBFC, they will also look into your employment history and stability to determine whether your loan should be approved or not. If you’ve been changing your job frequently, the underwriting team may take it as a negative and might not approve your loan. The company you are working for can also make a difference when it comes to a personal loan. A bank is more likely to give a loan to a person working with a well known company than someone working for a relatively unknown company.


Even if you are earning well or working with a good company at a decent position, it doesn’t entitle you to a loan. The bank will require some documents to process your loan. So make sure, you have all the documents with you before you go to the bank to request a loan. This will make both, your work and the bank’s work easier. For a list of documents, please approach the bank you want the loan from.

A personal loan is the best option if you want to smoother your cash flow in a time of crisis. Many people prefer to take out personal loans, because of the minimal document requirements, flexibility in usage of the loan and quick processing time. Until some years back, personal loans were given only to salaried people but not any more. Today, even self-employed people can apply for and receive personal loans.


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