Why You are Not Eligible for a Personal Loan?

Personal loans are significant for middle-class people to buy many of their needs. As we all know, there are three classes of people in India: lower, middle, and upper. The need for loans for Lower and middle-class people is high. They must undergo a complicated process of documentation and verification of all their sources while applying for personal loans. And in the end, the results are only suitable for some people because the loans don't get approved in many cases.

Responsible Factors for Personal Loan Approval

Various factors are responsible for the approval and eligibility of personal loan for professionals. To be eligible for an instant personal loan, you must check all the factors below. This blog will discuss essential factors that explain why you do not qualify for personal loans. They are as follows-

1. Income Statement

The bank will first check your bank balance and income statement over the years in order to make a decision regarding personal loans. If your income is not sufficient to meet the mark decided by the banks as per their personal loans rule, then you won't be eligible for getting the loans at first.

For example, your bank's minimum basic requirement regarding monthly income is at least 20k to 30k. But if your income is not above these set standards, then you won't be eligible for personal loans in any case.

 2. Credit score

Another vital eligibility factor for personal loans is whether you have a proper credit score.

What is a Credit Score?

Let us understand the meaning of the credit score in simple language. Credit score defines the track record of your financial payment cycle until now. The credit score will tell about your repayment cycle and typically how much time you have taken to pay your last payment cycle. It is also based on your payment capacity and whether you are following the payment cycles in time.

A CIBIL score is generated to determine your exact standing and get the desired personal loan.

A minimum credit score of 650 plus is essential to be eligible for approval of the loans. When your credit score is less than that, you won't be qualified for personal loans.

A credit score of more than 750 plus points is excellent and will quickly land you with the personal loan approval. Hence, the impact of credit scores on personal loans is very high.

3. Unstable Jobs

The next factor why you won't be qualified for personal loans is installed Jobs. Banks will always check the income source while providing your financial assistance. If your income source is suitable and constantly changing or unstable, they must reconsider their decision. The banks will think that you should be able to repay the installments of your loan at the right time during your repayment periods. But if your jobs are unstable, the banks will think before approving your loans. Hence, a stable job and source of income that provides for your livelihood is essential for getting the loans approved.

4. Debt to Income Ratio

The next factor that determines the ineligibility of your loan is the debt-to-income ratio. Let us understand the meaning of the debt-to-income ratio in detail. The debt-to-income ratio certifies the debt that you have for your monthly income to pay from. You cannot get personal loans if the debt-to-equity ratio is very high.

The situation is unfavorable when the percentage of your debt is high compared to the income you earn every month. For example, if your monthly income is around 50000, you have to pay almost 30k to 40k for your debt installments. It means a significantly small amount is left for your monthly fixed expenses. You will need more funds above the income every month to save. Then, banks will think you won't be able to pay the monthly installments of your loans. In such cases, banks will indeed reject your application for personal loans.

Conclusion

The above are some of the eligibility factors for personal loans. When you want a personal loan for a financial need, the factors should be appropriately considered. So, Dadhich Finserv Private Limited, An NBFC Registered and well Established finance loan service provider in Alwar, Rajasthan. It has quick and easy loan approval process. Moreover, you contact with it’s executive for applying personal loans.