Personal Loan

How to Calculate Eligibility for Different Types of Personal Loans?


It has become easy to apply for a personal loan. You can apply for many different types of personal loans. They can be used for anything, such as vacation or education expenses. You need not apply for a loan with the same bank. You can also apply for a personal loan from other banking and financial institutions. One thing is often ignored: personal loan eligibility.

Even if you apply for a loan, there is no guarantee you will be approved. The reason is simple: your application’s approval depends on eligibility criteria. Your application is evaluated against each. If you check most of the boxes, you receive the loan. Your application is rejected if you do not meet all requirements. It sounds simple enough.

So, what determines personal loan eligibility?

General personal loan eligibility criteria

Many factors determine if you are eligible for a personal loan or not. The factors include your monthly income, age, and whether you are employed. Different institutions have different criteria.

CIBIL score

You need a good credit score to avail of a personal loan. It is important to ensure that you do not default on any payments. You can check your CIBIL score by requesting a credit report from your bank.


Your loan eligibility is heavily dependent upon your income. You can get higher principal amounts if you have a higher income. However, a steady income is a bonus.


Where you live also plays a role in determining personal loan eligibility. Your salary is evaluated against the cost of living in that city. If you reside in a metropolitan area, you will need to have a higher salary to apply for a loan.


Working for a good organization is also something that would be a factor in determining personal loan eligibility. Working at an organization with a good credit history can boost eligibility. While institutions rarely refuse applications simply because of your employer, they may reject the application if they think you cannot make the EMI because of your job.

Real estate

Your application has a higher chance of being accepted if you own a home. Renting a property means a part of your income is spent there. As a result, you have less money to manage EMI and expenses. It reduces your ability to repay the loan. Many lenders see this as a risk.


You should be 25 years old if you are self-employed or own a business. If you work for an employer, you are required to be 21 years old at the time of application. Your maximum age at the time of loan maturity should be 65 years. 


Most lenders provide loans only to Indian citizens or residents. However, some lenders also provide loans to non-resident Indians (NRIs). NRIs will have to meet another set of criteria.

Personal loan eligibility based on employment

As mentioned before, personal loan eligibility criteria differ from one lender to another. The general criteria for salaried individuals, self-employed professionals and business owners for personal loans are listed below. 

Business owners and self-employed professionals

  • You should be in your current profession for at least 2-3 years. 
  • Your minimum income per annum should be 1 lakh rupees. 
  • You need to submit income tax returns for the last two years.
  • You need to submit proof of business. You need to provide a business registration certificate, license, or GST number.
  • You need to submit a TDS certificate (Form 16A) if you pay your salary.

Salaried individuals

  • You should be employed at your current organization for at least six months. 
  • Your minimum income per month should be at least INR 25,000. However, some lenders accept INR 15,000 p.m. salary.
  • You should submit your salary slips for the last six months.
  • You have to submit Form 16 or income tax returns.

Apart from this, there might be different concessions depending on the lender. Personal loan eligibility changes with each bank.

Documents required to prove personal loan eligibility

You can provide the following documents.

  • Proof of identity: passport, Aadhaar card, PAN card, etc.
  • Proof of Signature: PAN card, passport, etc.
  • Proof of Address: utility bill, rent agreement, ration card, etc
  • Proof of income: Bank statements from the last six months, TDS returns or Form 16.

You cannot use the same document as proof of two or more criteria.

Tips to improve the personal loan eligibility

  • Always pay your bills on the due date. If you miss a payment, it can decrease your credit score. This will affect your eligibility.
  • If you have a lot of debt, try to clear it as much as possible before applying for a personal loan. Debt can affect your CIBIL score.
  • A full-time job makes it easier for you to become eligible for a personal loan. The lender is sure that you can pay back the loan. That makes it easier for them to tender a loan. However, if you do not have a job, you should be able to provide proof of income.
  • Maintain a trustworthy relationship with the lender.
  • Your age decides your eligibility. Lenders limit how old you can be when applying for a loan. The logic is simple: the younger you are, the more time you have to earn money.


Read all the terms and conditions before applying for a personal loan. It is equally important to calculate personal loan eligibility before applying. A personal loan can help in many ways. However, having a good understanding of the financial product is necessary before making any purchase.

The tips in this article will help you understand the facts and apply for a loan. If you are ready to read more, visit Piramal Finance