Get Approved! Top Personal Loan Criteria You Need to Know - Loan Trivia


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Friday 3 May 2024

Get Approved! Top Personal Loan Criteria You Need to Know

Finding yourself in a demanding financial crunch is not uncommon. In such challenging times, a personal loan can emerge as a preferred solution to meet your urgent and unplanned financial needs. However, the loan approval process can sometimes be dispiriting, especially if you're unsure about the personal loan criteria and the associated processing fee for a personal loan.

To ensure that you stand the best chance of getting your personal loan approved, it is crucial to understand and meet the standard personal loan criteria. This knowledge will not only smooth your application process but also help avoid any disappointing loan rejections.

Let’s look at the top personal loan criteria you need to know to get approved:

1. Credit Score: You could argue that your credit score is the most significant personal loan criterion. It's a numerical expression representing your creditworthiness, influenced by your credit history, including repayment timeliness and credit utilization ratio. A higher credit score indicates a higher probability of the loan being repaid timely, making you a favourable borrower in the eyes of lenders. 

2. Stable Income: Lenders typically favour individuals with a stable income as such people are deemed more capable of repaying the loan on time. Your employment type (self-employed or salaried), employer's reputation, and work experience can also influence your personal loan application. It's not uncommon for lenders to specify minimum income requirements.

3. Age: Age is another essential personal loan criterion that many overlook. Lenders usually require borrowers to be within a certain age bracket, as it indirectly indicates earning capability and repayment capacity. 

4. Previous Loan Repayment History: Banks and financial institutions draw conclusions on your repayment chances based on your past credit behaviour. Any late payments, deferrals or defaulted loans can cause a negative impact on your credit score, and thus your loan approval chances.

5. Debt-To-Income Ratio: This ratio is an assessment of your monthly income against your monthly debt obligations. A lower ratio implies that you have a good balance between income and debt, increasing the likelihood of your loan being approved.

Now that we've delved into the personal loan criteria let's explore another crucial aspect - the processing fee for a personal loan.

What exactly is the processing fee for a personal loan?

The processing fee is a one-time charge that lenders impose at the beginning of the loan process. It usually ranges between 1% to 3% of the loan amount, depending upon the lender and the type of loan you're availing. Some lenders may allow you to negotiate this fee. 

The processing fee covers the administrative costs involved in the loan assessment: checking your documents, credit-worthiness evaluation, and finalizing the loan terms. It's essential to consider this fee when calculating your overall loan budget and choosing a lender.

In conclusion, focusing on these personal loan criteria can significantly aid in laying the groundwork for a successful loan application. Maintaining a good credit score, showcasing a stable income, ensuring a healthy debt-to-income ratio, and a clean loan repayment record are favourable personal loan criteria that lenders consider. 

However, remember, every lender may have varying personal loan criteria and processing fee for personal loans. As a potential borrower, it is crucial to undertake thorough research and choose a loan that aligns with your financial profile and needs. An informed decision can save you from unforeseen surprises and help manage your financial health effectively. 

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