What is Loan Eligibility?
While loan eligibility depends on the lender as well as the type of loan, it is primarily calculated on the basis of basic factors like interest rate, loan tenure, geography, nature of employment, gross monthly salary, other loan obligations, and market value of the property.
Before applying for any loan, it is important to check whether you are eligible for it or not. The eligibility criteria of any loan depend on certain basic parameters which you need to fulfil and these parameters will differ based on the type of loan that you are applying for. Here is a definite list of loan eligibility for the basic types of loans.
Home Loan Eligibility Criteria
For home loans, your eligibility amount is primarily based on your current income and your repayment capacity. Apart from this, a few other eligibility aspects include:
- Credit score
- Financial liabilities
- Current financial position, etc.
You can further increase your eligibility amount if you:
- Add an earning family member as a co-applicant
- Present income flow with regular savings
- Invest regularly
- Present details of additional variable income
- Repay existing loans and other debts
- Present the records of the variable component in your salary
Eligibility for Car Loans
For new cars, most of the lenders provide up to 100% of the ex-showroom price as loan. Whereas for pre-owned cars, you would receive about 80% of the valuation of the car. Your eligibility amount would however be also dependent on the following factors:
- Work experience – total and with the current employer
- For self-employed individuals, the duration of business
- Make & model of the car
You can further increase your eligibility amount for car loans if you:
- Pay your debts on time
- Work on improving your credit score
- Arrange for all relevant and supporting documents
- Buy the car from a reputed dealer
Eligibility for Personal Loans
Personal loans are worth considering for contingency plans, holidays, or for consolidating your debts. While applying for it, you will be required to submit basic proof of income with other proofs for address, ID, bank statement, etc. For personal loans while the maximum eligibility amount depends on your current earnings, repayment capacity, and existing EMIs, here are a few other eligibility factors that will need to be considered:
- Employment type
- Latest filed income tax returns
- Minimum income requirements based on geography
- Minimum and maximum age requirements, between 21 and 60
- Work experience – total as well as in the current organization
You can increase your eligibility amount for personal loans if you:
- Clear all your debts before applying for it
- Work on your credit score
- Monitor your debt-to-income ratio
- Keep your professional life steady
- Include your spouse’s income
- Present a detailed statement on purpose of the loan
Eligibility for Education Loan
Education loans are awarded to students for pursuing their studies from either India or abroad. As these are unsecured loans, they come with a higher interest rate. The main eligibility requirement would be good academic performance historically. Apart from this, the other factors that would define the eligibility amount include:
- Admission confirmation from a recognized educational institute
- Must be in the age bracket of 18 to 35
- For full time students, a co-applicant is required as a guarantor who can be either a parent/guardian or a spouse/parent-in-law in case the applicant is married
- Must be a resident of India
You can improve your education loan eligibility if you:
- Score good marks in the entrance exam
- Display good academic record overall
- Present the income proof of the guarantor
- Secure admission in a college/university with good reputation
- Display good future prospects in terms of earnings
There are various loan eligibility calculators available online and offline with banks and other financial institutions which would determine the loan amount that you are entitled for.
What is EMI Calculator?
EMIs are Equated Monthly Instalments that you need to pay monthly as a part of the complete repayment of the loan. EMIs include two parts – principal amount and interest. The interest component is the cost of loan applied by the lender which depends on factors like type of loan, purpose of loan, term duration, assets submitted as collateral, etc.
EMI calculators available online help you determine the monthly repayment that you will need to do on the loan that you have secured or wish to apply for.
Based on the loan tenure, the lenders will divide the repayment schedule by determining the EMI that you will need to pay. EMI can be directly calculated by a simple formula:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
Here P is the principal amount or the balance loan amount, R is the interest rate on a monthly basis, and N is the loan tenure.
You can also calculate EMI in excel using the PMT function and inputting the monthly interest rate, number of instalments (or tenure of loan in months), and the loan amount.
Instant Eligibility Checks and Digital Loans
We now know the eligibility criteria for the four main types of loans. These are still just the basic criteria. Depending on the lender, your profile, and the type of loan, you might be required to go through eligibility checks and furnish other relevant documents. With PaySense, however, you can get your eligibility checks done instantly within a matter of a few minutes and then apply for instant loans of up to Rs. 2 Lakhs based on the same. With minimum checks and maximum benefits, we will disburse the best suitable loan for you. The loan will be disbursed to your account in a record time and you can enjoy the benefits of it based on your planning and requirements.
Apply for Loans of upto ₹5 Lakhs easily using your phone or laptop, and pay back on low EMIs