Last Updated on: 18th October 2024, 12:56 pm
When applying for a personal loan, many applicants wonder how much they can actually borrow. While lenders often mention eligibility criteria on their websites, it can be difficult to estimate the exact loan amount you’re eligible for just from this information. That’s why reputable institutions like SMFG India Credit offers personal loan eligibility calculators, which estimate how much you can borrow based on factors such as your age, income, and existing financial obligations.
In this article, we’ll look at the factors that affect your eligibility and how you can calculate personal loan eligibility using an online checker.
What Is a Personal Loan Eligibility Calculator?
A personal loan eligibility calculator is an online tool designed to help you check your eligibility for a personal loan based on factors such as income, employment type, and age.
While you can easily review the eligibility criteria for a personal loan on a lender’s website, a personal loan eligibility checker offers a more realistic estimate of the loan amount you can borrow. It delivers results in seconds, making it a more efficient method of calculating personal loan eligibility compared to manually reviewing the criteria.
How to Use a Personal Loan Eligibility Calculator?
SMFG India Credit provides an easy-to-use personal loan eligibility calculator that helps you estimate your eligibility and borrowing capacity for a personal loan. It takes into account key factors such as your employment type, income, age, net income, and net monthly obligations. Let’s see how to use this calculator:
- Access the personal loan eligibility calculator here.
- Select your employment type from the options – Salaried and Self-Employed.
- Enter your age. Please keep in mind that the minimum age requirement is 22. Your age should not exceed 65 years old at the time of loan maturity.
- Select your net monthly income and make sure to deduct any applicable taxes.
- If you have any monthly obligations such as car loans or credit card dues, enter the amount accurately.
- Select the interest rate, which will start from 13%* per annum.
- Select your preferred loan tenure from 12 to 60 months. You can change the interest rate and loan tenure to compare different results.
- View the final amount displayed on the right side. That is an estimate of your borrowing capacity based on all the details you have entered.
Disclaimer – Please note that the personal loan eligibility checker only provides an estimate of the loan amount you may be able to borrow. The final eligibility, loan amount, and interest rates will depend on several factors including the lender’s policy at the time of loan application.
Factors That Affect Personal Loan Eligibility
Some common factors that are taken into account when calculating personal loan eligibility are as follows:
- Income: Your income is a crucial determinant of your personal loan eligibility. Lenders prefer applicants with a stable source of income, as it indicates the ability to repay the loan. A common rule is that your EMI (Equated Monthly Instalment) should not exceed 60-70% of your monthly income. In Tier 1 cities such as Delhi or Mumbai, some lenders may have higher income requirements due to the higher cost of living.
- Credit Score: Your credit score reflects your creditworthiness and history of responsible credit behaviour. A higher credit score, ideally 750 or above, improves your chances of approval and may result in lower interest rates. A lower credit score, on the other hand, may lead to higher interest rates or even rejection.
- Age: Age plays a significant role in loan eligibility. Younger applicants, especially those in their 20s or 30s, generally have more time to repay the loan, making them more attractive to lenders. Older applicants, especially those nearing retirement, might find it harder to secure long-term loans with favourable repayment terms.
- Employment Stability: Lenders assess your employment stability to evaluate your financial reliability. A steady job history and long tenure with your current employer signal to lenders that you are more likely to have a stable income and be able to repay the loan.
- Existing Debt: Lenders assess your existing liabilities to evaluate your Debt-to-Income (DTI) ratio. A high DTI ratio suggests you have a significant amount of debt relative to your income, which can make lenders wary. Ideally, your DTI ratio should be less than or equal to 30% for better chances of loan approval.
Conclusion
Getting an estimate of how much you can borrow can help you make educated choices about your finances. A personal loan eligibility calculator makes this process simpler by providing a realistic picture of your borrowing capacity based on factors such as your net income and existing monthly obligations. However, keep in mind that the calculator provides an estimate. Your final eligibility will depend on several factors such as your creditworthiness and lender’s specific requirements.
*T&C apply. Loan eligibility, loan terms, and loan disbursement processes are subject to the lender’s policy at the time of loan application.
