Factors In The Personal Loan Approval Process

A personal loan that is easy to avail has been established. They are exceedingly simple and uncomplexed but that doesn’t mean a highly authorized and reputed bank or NBFC sanctions your loan without having you meet their requirements promptly. A loan approval process is affected by various factors and the bank or NBFC considers all this before disbursing the money.

Factors Affecting The Loan Approval Process Of A Personal Loan:-

Eligibility criteria: The first criteria is the age requirement of the applicant, between the ages of 18 years and 65 years are permitted to avail a loan. Though most banks and NBFCs require a minimum age of 21 years. The applicant must be a working professional-salaried or self-employed. Co-applicant features are available in personal loans. The applicant should have been working for at least 2 years(employee or employer) and a minimum of one year under the same work. The minimum salary of the applicant should be Rs 20,000 per month to avail of this loan. The Personal Loan Interest Rate depends on various factors.


The Required Documents:-

ID Proof: A gazetted document verifying the official id of the applicant. It could be a PAN card, voter id, Aadhar card, passport, driving license or any other.


Residence Proof: An authorized document verifying the applicant’s official place of residence. It could be a PAN card, Aadhar card, voter Id, passport, driving license or any other.


Income Proof: A valid document mentioning the applicant’s monthly or yearly income. ITR, Form 16, Salary slips, or any other authenticated proof for the income of the applicant.


Employment Proof: An authorized proof that recognizes the applicant as an official employee. Employee id or business proof or any other valid document.


Bank Statement: The bank account statement of the applicant for the last 3 to 6 months depending on the lender’s request.


CIBIL Score: A three-digit score that summarizes a credit report is CIBIL or credit score. The credit report the score summarizes consists of the applicant’s past loan acquisitions, personal information, banking information, employment information, EMI payment responsibility, and frequencies. The score usually ranges between 300-900 and a score above 750 is considered excellent and is highly recommended to avail personal loan. Below 600 is a low score and -1 is a bad score. Banks and financial institutes hesitate to hand personal loans to applicants with a low or bad credit score. The approval process of the personal loan highly depends on the CIBIL score s it is an unsecured loan(no collateral required). 


Personal Loan Details:-

The loan amount is the money an applicant is availing as a loan and has to pay back by the end of tenure with monthly instalments every month. The loan amount banks and NBFCs grant are as high as half a crore and depending on the income and the eligibility level of the applicant a bank or NBFC sanctions the requested amount. The loan term is the period the applicant is availing the loan for and usually varies from 1year to 5 years with the personal loan interest rate varying from 7.5%-20% per annum. The monthly instalments must be paid on time so as not to lower the credit score and hinder future possibilities of availing of a loan. The processing fee is incurred by every bank and NBFC in the nation for the processing and approval of the loan. The charge can be a fixed amount or a part percentage of the loan amount. It entirely depends on the financier. The fee could go as high as 2.5% of the loan amount up to Rs 25,000. The foreclosure or foreclosure fee is procured if and when the application closes the account i.e ending the loan before the tenure completes. The charge completely depends on when the application closes the account and if it is in the middle of the term, the fee could go as high as 6% of the outstanding loan amount and if it is in the first or last 6 months of the loan, the fee is NIL. SBI Personal Loan is a highly renowned personal loan with great deals and affordable interest rates that one should definitely check out.