A personal loan will offer plenty of benefits, especially since it can be used for several purposes. For one, it can be used to pay off any previous debts. It can also be used to purchase an expensive gadget, or even finance your holiday trip.
However, while the loan will offer you financial aid, the fact still remains that you need to get your personal loan approved before using it. This can occur only if the lending institute offers the approval on your application.
So what are the factors taken into consideration for this approval process? Given below are the important ones:
Do you meet the eligibility criteria?
This is the first factor that all lending institutes will consider. The list of eligibility criteria’s determine whether you afford the loan in the first place. Under this category, you need to be above the accepted age, earning a sufficient income, and have no previous debts or bankruptcy declaration. tools such as the personal loan EMI calculator will help you get an idea of what to expect in terms of your eligibility criteria.
Are you stable enough to handle the loan?
Your employment and your address are two factors where your lender will use to check your stability. If you have spent considerable years with your employer, your application will be viewed favourably. If you are as self – earner, you will need to provide sufficient proof that you can repay the loans. In either case a personal loan calculator will provide the ideal assistance as to your financial affordability. Residential stability will be more of a challenge if you still live with your parents, or if you move often around. If you own your own home, or you have a signed lease for more than 6 months, the approval will work in your favour.
Can you afford the loan repayments?
While you may earn an income, do you have sufficient disposable income to suffice the repayment of the loan? The lender will want to know if you can afford the repayments, by assessing your income and your expenditures. They will also take into consideration unexpected life events, so that you have sufficient buffer funds to deal with such events. In order to prepare for these factors you can always use the personal loan EMI calculator to get an idea of what to expect.
Can they expect the repayment from you?
Lenders can determine how much of a risk you can be, just by taking a glance at your assets and liabilities. This is basically known as your net worth. The higher your net worth as compared to your liability, the less of a risk factor you pose. By using the personal loan calculator, you can get sufficient data to leverage for an approval from the lender.