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WHAT FACTORS ARE REQUIRED TO QUALIFY A LOAN?


In recent times, loans are availed for a variety of reasons and needs. The most popular loans in our country are Personal Loans, Business Loans, Home Loans, and Gold Loans etc. Of these, there are few kinds of loans which are unsecured and do not require any collateral to be pledged against loan money towards the lender.

On contrary, secured loans generally require collateral. So, before you "Apply For Loan" you must check whether your profile is capable of qualifying a loan. Different lending institutions adhere to differing eligibility criteria, usually considers the factors such as income, credit score, repayment capability and many more.

In this blog post, we will discuss about the loan qualification and read about the factors that must be kept in mind while getting a loan:

Credit Score: It is one of the most significant eligibility criterions that need to be fulfilled while availing any kind of loan. Before approving your loan application, every lender checks your credit history based upon your CIBIL score which indicates your credit worthiness. A good credit score plays a key role in getting your loan approved.

Therefore, a credit history is reflected through your credit score. So, make sure to maintain your credit score to get an instant approval on your loan.

Age: Your age also plays an important role in influencing your loan eligibility. Most of the banks and NBFCs that offer loans have kept their age criteria as 21 to 60 years of age. However, age can also vary according to lending institution’s terms and conditions.

Income: It is another crucial factor responsible after qualifying a loan. If you have regular and huge earnings, the chances of your repayment capacity are higher. This factor is totally applicable for both salaried professionals as well as self-employed individuals.

It is good to mention all sorts of earning sources in your loan application whether it’s part-time, freelance or rental. It will increase your eligibility and repayment capability that you can afford a loan easily.

Debt to income ratio: This ratio is expressed in percentage and is divided between your gross monthly earnings and monthly debt repayments. Every lender takes care about your debt to income ration and has a major concern, whether your monthly salary can cover the new loan repayment.

To calculate your debt to income ratio, sum up all your monthly debts and divide by your gross monthly income. Well, an average ratio that is accepted by the lender is around 35%. If your debt to income ratio lies within this percentage then there are great chances of successful approval.

Hence, it is better to pre-qualify a loan whenever it’s possible and do check with the lender what eligibility criteria to fulfill before you "Apply For Loan Online" or offline as each lending institutions has its own set of criteria. This will ensure your financial fitness to apply for any kind of loan.

Therefore, strong qualifying factors not only help to increase your chances of loan approval but also help to secure a loan with reasonable rates of interest.


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