India has a thriving lending market. The demand for non-food bank credit rose by 13.1% in January 2019, according to a report by Reserved Bank of India. Personal loan account for a sizeable share of the total debts in India. An easy to meet personal loan eligibility criteria along with the capability to apply for a personal loan online makes them increasingly popular and convenient amongst eligible candidates.
Such a significant increase in the number of credits is also due to the current economic condition. An increasing cost of essential goods forces individuals to avail an advance to pay for goods upfront and repay the debt in EMIs. With leading lenders offering affordable rates of interest with their personal loans, repayment has become much more manageable than before.
However, you should check your eligibility for a personal loan to get the lowest rates of interest rate. Lower interest rates will translate into affordable EMIs and help you save a significant amount of funds during your loan’s repayment tenor.
Eligibility Criteria For a Lower Rate of Interest
Your eligibility for a personal loan at low interest rates depends on several factors including your age, repayment capability, FOIR, and existing debt. Let’s take a look at how each of these factors affect the rate of interest to your loan.
- Age – Most financial institutions necessitate an applicant must be between 23 to 55 years of age to meet a personal loan eligibility requirements. However, you might get a better rate of interest if you fall within the lower bracket of that age range.Lenders prefer applicants from a lower age range as they will have a longer employment tenor. It will allow them to repay the debt over a lengthier period even with a lower interest rate.
- Employment Stability – Employment stability is a crucial factor to decide the interest rates of your loan. Most financial institutions necessitate employment at an MNC, public or private institutions. Also, most lenders look for a certain number of years of employment to ensure the borrower has a stable career and steady income. It eliminates chances of credit default. Non-banking financial institutions like Bajaj Finserv offer loan at easy-to-meet eligibility criteria. To avail a loan from Bajaj Finserv, you need to be a salaried individual and a residing citizen of India. It offers a large sum of personal loan of up to Rs.25 Lakh at low interest rates.
- Credit Rating – You must have a good credit rating to be eligible for the lowest rate of interest. A credit score of 750 or higher shows that you are a responsible borrower. Lenders use the rating to measure your creditworthiness and repayment capability.
Good credit will increase your personal loan eligibility and help you secure a larger loan amount as you pose less risk to the financial institution.
- Financial Condition – Your financial condition is another important aspect that lenders consider while deciding the interest rate. If you have a high fixed obligation to income ratio (FOIR) or have applied for multiple credits within a small period, you will be considered a risky borrower. Lenders are likely to increase the interest rate to speed up the repayment.
Enjoying the lowest interest rates on a personal loan requires you to meet the aforementioned criteria. Also, it might also depend on your city of residence, income, and expense, for which you can take the help of a loan calculator to determine the tenor and interest rates.