If you are applying for a personal loan, then there are some requirements that you must fulfill before the bank can grant such loan applications.
Consideration is given based on the status of your employment. We shall be considering what the banks will require from an individual who wants to apply for a personal loan to fulfill a need.
Your age is a deciding factor in the application for a personal loan. This is the first thing that the lending institution will look at before considering your application.
This age limit of a thing varies from one country to the other; you are therefore advised to check the minimum age limit in your country before you tender your application to avoid outright rejection. There is also a maximum limit on the age for which banks grant loans to individuals.
The lending institutions will want to minimize their risks at all costs; therefore, check the maximum age to see if you fall within the age bracket.
Lending banks are very reluctant to give personal loans because of the risks involved. You are aware that you can use the loan for any venture under the sun that catches your fancy; hence the cloud of uncertainty that beclouds this type of loan.
Since the banks will not be able to track what you are using the loan for (tracking it in the first place makes no meaning), they want to be sure that you have something solid in place to pay back the loan.
Only those that are on a regular salary and can show means of steady income for at 6 months have the privilege of getting the nod for the loan. Those that are self-employed will have to go the extra mile to convince the lending houses before they can scale the hurdle of occupation.
How Much Are You Presently Earning?
Another area where the searchlight will be beamed is your income at the end of every month. We shall address the maximum amount that you can get for a personal loan later; this amount is going to be decided on the strength of your monthly income.
So if you have an amount that you intended to apply for, it will not be sealed unless the calculation on your income by the lending house speaks in your favor. The EMI for the loan should not exceed 40-50% of your income. If the desired amount falls within the percentage stated above, then you are good to go.
Are You Servicing A Loan?
Yet another consideration for granting the personal loan by the finance houses is your debt portfolio. If you are servicing debt, then the calculation of the amount that you are going to get will be factored into the existing calculation. Several applicants get disqualified at this stage of the application.
If an applicant cannot show proof of steady payment of the existing loan, then the lending houses will not trust such an individual. Where the trust is not there, the application will be turned down.
But if the history shows that you are a committed person that honors the terms of monthly payments as seen in history, the banks will be willing to offer you the amount you so demanded.
The Credit Score
This is in a technical area that you should work on if you want your application to scale through the screening process.
There is a limit to the credit score that the banks will accept before taking the risk of granting the personal loan. Take your time to check the standard from the bank that you want to seek a financial lifeline from.
It is better to work on your credit score and make sure it is well above the minimum standard before you apply for the loan. If you are planning to go for a vacation during winter with your family for instance; then you can start working on your credit score right from the onset of summer of that same year.
Personal loans are rarely given by the banks, but with preparation on your part, your application will see the light of day.
The Amount That You can Get
The maximum amount that will be granted is determined on individual basis. They include the liabilities that you have, your debt portfolio is another factor and your credit card score will go a long way to determine the amount that you will get at the end of the day. The repayment period is between 1-5 years.
Though the traditional banks are very reluctant in giving personal loans, if you put your acts together and get all the conditions stated above in place, the lending institutions will have no choice than to grant you your wish.
Your level of preparation will determine how fast the process will take you; it should not be more than 7 days under normal circumstances.