The number of lenders in the financial market has increased. As a result, access to personal loans has also increased. Today, people take personal loans for various purposes, ranging from financing a wedding to renovating a home. But default on personal loans has also increased in recent years. It is a consequence of the high-interest rates in the case of personal loans.
Lenders now insist that borrowers meet personal loan eligibility thresholds to get credit. One of these is the borrower’s financial profile, which includes their income.
In this blog, you will read about the general eligibility criteria for a personal loan. You will also find the criteria someone with a salary of Rs. 75,000 would have to meet.
What is a Personal Loan?
A personal loan is a type of unsecured loan. Unlike secured loans, such as a mortgage or a car loan. A personal loan does not need the borrower to provide any collateral. Instead, the lender evaluates the borrower’s creditworthiness and income. It is used to determine their ability to repay the loan.
Personal loans are used for various purposes. These include consolidating debt or covering unexpected expenses. They are usually issued for a fixed term, with a fixed interest rate and regular monthly payments. But the rate is usually higher than in the case of other loans.
Personal loans are a popular financial product. It is so because they are easy to get and can provide funds. But they also come with certain risks and responsibilities. It is important to consider the terms carefully before reaching an agreement.
Five Things to Consider When Taking a Personal Loan
These are the key factors that you should consider before making a decision:
Purpose of the Loan
When taking out a personal loan, the first thing to consider is why you need the money. Personal loans can be used for various purposes, including unexpected expenses. By defining the purpose of the loan, you can choose the type of loan that best meets your needs. It will help you avoid taking on more debt than you can handle.
Loan Amount & Repayment Period
These are two of the most important factors to consider. The loan amount should be based on your need and ability to repay. The repayment period should be long. It will allow you to make your monthly payments easily. It will help ensure you can afford the loan without stretching your budget too thin.
Interest Rate & Fees
The interest rate and application fees can impact the loan’s total cost. It is important to compare interest rates and fees offered by different lenders. You must choose the one that offers the best value for money. Remember that a lower interest rate may not always be the best option. It may come with higher fees or hidden charges.
The lender you choose to borrow from can also impact the terms and conditions of your loan. It is vital to choose a reputable, trustworthy lender. You must go with those who offer a loan that meets your needs. You can research different lenders. Compare their offers to find the one best suits your requirements.
Credit Score & Financial Situation
Your credit score and financial situation are also important factors. A good credit score can improve your chances of getting approved for a personal loan. It can also help you secure a lower interest rate. A low credit score or a high debt-to-income ratio may make it difficult. It may also result in a higher interest rate.
Check Eligibility for a Personal Loan with Rs. 75,000 Salary
If you are earning Rs. 75,000 per year, you need to consider these key factors:
Your credit score
Your credit score is a three-digit number. It reflects your creditworthiness. It plays a major role in determining your personal loan eligibility. Most lenders need a minimum credit score of 600 to 700 for personal loan eligibility. You may not get approved if your credit score is below this range.
Your debt-to-income ratio
The debt-to-income (DTI) ratio measures how much your income goes toward paying off your debts. Most lenders consider a DTI ratio of 36% or lower ideal for personal loan eligibility. If your DTI ratio is higher than this, you may have a harder time getting approved for a personal loan.
Your employment and income
Borrowers need a stable job and a steady income to be eligible. You should have no difficulty meeting this rule with Rs. 75,000 monthly. The amount is enough to pay off a medium-sized loan.
Besides the above factors, some lenders may have extra parameters. These include your age, residence, and existing liabilities. Such parameters are used to determine your personal loan eligibility. You will have to provide proof of address and employment. Most importantly, you will have to give a photo ID. This photo ID must be a government-issued one.
To check your personal loan eligibility, you can approach a lender directly. You will have to provide them with information about your credit score. You will also have to tell them about your DTI ratio, employment, and income. Most lenders have online eligibility calculators. You can use them to get a rough idea. It will help determine your chances of getting approved for a personal loan.
You can also use the services of a financial advisor or credit counselor. They can help you assess your personal loan eligibility. They can also recommend the best course of action based on your circumstances.
The Parting Words
If you earn Rs 75,000, you can easily get a personal loan. But you must remember to check your existing liabilities and commitments. It must be done before you apply for a new loan. You can speak with different lenders if you are unsure about your eligibility. Some lenders may even be willing to negotiate the terms and conditions. Talking to various lenders will also help you find the best possible offer.
You can also read detailed blogs about personal loan eligibility on the Piramal Finance website. It would help you find answers to questions that may not have been answered yet.