In case you have met with an unforeseen financial crunch and are in need of a personal loan, it is crucial that you first conduct a fair share of research about the terms and conditions adhering to taking personal loans. This will allow you to gauge if it is the better option for you in a bid to improve your financial condition or if it will become an additional financial burden on your shoulders. You must also be made aware of the processes involved in getting one of these loans approved from the bank or a non-banking financial institution. This article will deal extensively in giving you an understanding of how personal loans operate, how much you can get your hands on at once and the duration and repayment scheme that you will have to engage during the process.
What is the loan amount dependent on?
It must be understood when you apply online for personal loan, that the bank or the non-banking financial institution will take into account your monthly income. In most cases loan amounts can go to about two to three times of the individual’s annual income. It is noteworthy in case you already have an existing loan to your name that the institution will calculate your income excluding the money that gets deducted from your monthly income in paying the EMI for the existing loan, at the time of taking your income into account for approval of the loan you have applied for.
Maximum loan amount that you can get
It is important to understand that unlike banks which have a fixed loan amount determined for all personal loans lending institutions have no such qualms. However, the maximum loan amount that you can go for is without a doubt, dependent on the institution’s determining of the amount. They will reach the conclusion based on a number of factors that add or subtract to your general personal loan eligibility. The eligibility criterion have been kept separate for those who are salaried and those who are self-employed and need the cash flow for their business related purposes.
What affects your personal loan eligibility?
As has been mentioned earlier, there are a number of factors which are at play in determining the maximum loan amount you can avail from the financial institution of your choice and some of them have been discussed below:
- Other loans that are existing and the amount that gets deducted from your income in a month in repaying these loans.
- Your credit score which determines the regularity and neatness with which you have handled your finances and debts in the past.
- Your financial track record which lends the institution an insight into the kind of repayment schemes you have gone for in the past and whether or not you have been able to hold up your end of the scheme for all previous loans.
- In case you need more loan amount than what you have been eligible for, it is possible for you to increase the amount by clubbing the income of your immediate family members.
It is necessary, however, to have a fair share of idea about what you are signing up for on a monthly basis and if that is going to be comfortable with the current scenario of your finances. In order to do this you may seek the help of the emi calculator for personal loan that are provided on the official website of these financial institutions wherein you can fill in your data and get an insight into the monthly EMI and the interest rate for personal loan you will be paying for in this loan.