A loan eligibility calculator can help you determine whether your financial stability is enough to apply for a Personal Loan. To use a loan eligibility calculator, you must enter all the relevant details as requested. Finally, the calculator will analyse the financial data you have entered to determine whether you are eligible. In this article, we discuss all the factors that will determine your loan eligibility and provide the steps necessary to successfully use a loan eligibility calculator. 

Factors that Impact Loan Eligibility

When using a Personal Loan eligibility calculator, you will be asked to enter the information listed below. Here’s how they can impact your loan eligibility: 

  1. Your Income Level and Stability: To successfully apply for a loan, most lending institutions require applicants to have a minimum income of Rs 20,000 to Rs 30,000 per month. Fulfilling the income requirements will significantly increase your chances of getting a loan. Additionally, it is not uncommon for lending institutions to require a minimum of one year work experience from potential loan applicants. 
  2. Reputation of Your Employer: The organisation at which an individual is employed can impact your chances of getting a loan. For example, banks and other lending institutions prefer applicants who are employed at MNCs or government organisations, since they indicate job security and stability. 
  3. Your Housing Situation: Lending institutions are less likely to offer favorable loan terms if you live in a rented apartment. This is because individuals who live on lease have to allocate part of their income towards paying rent. Hence, lenders are more skeptical of an applicant’s ability to pay back a Personal Loan. If you are a potential applicant who lives in an apartment or home that you own, then it will be to your advantage. 
  4. Your CIBIL Score: A good CIBIL score is a key factor in determining your loan eligibility. A good CIBIL score is considered to be around 750, although you can still apply for a loan if your score is lower. However, individuals who apply with a lower CIBIL will be required to pay higher interest rates. 

If you want to improve your credit score, here are some tips you can follow: 

  • Avoid taking on too much debt at one time. 
  • Keep a low credit utilisation ratio. 
  • Pay your credit card bills and EMI dues on time. 

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How to Use a Loan Eligibility Calculator?

This section will cover how to use a loan eligibility calculator.  There are many loan calculators available online. This facility is provided by all major banks and other financial institutions. You can visit the website of the financial institution you want to borrow from and utilise the loan eligibility calculator there. Once you have opened the calculator, you must select the type of loan you are applying for. Following this, you will be asked to enter the following details: 

  • Your Monthly Income
  • Your Current Obligations/EMI

Conclusion

You can use the loan eligibility report to understand the type of loan you are likely to receive from the bank you have chosen. You can consider using the Personal Loan eligibility calculators of various lending institutions to look for a better option. 

Another option could be to hold off on the loan until you have improved your CIBIL score. If you are satisfied with the results of your loan eligibility report, you can consider going ahead and applying for your Personal Loan. Remember to check the terms and conditions for interest rate, tenure period, conditions of loan pre-closure, and other such matters properly.