Personal loan eligibility: 5 important factors you must know

Personal loans are a widely used financial tool for borrowers to manage unplanned expenses or fund essential personal projects. Still, obtaining approval for any particular personal loan product depends on several key factors that lenders evaluate.

These factors include past repayment history, credit scores, employment history, missed payments, and a host of others. Understanding such important aspects can boost your chances of securing a loan on favourable terms.

Currently, the applicable personal loan interest rates vary across different lending institutions. They on a fundamental basis depends on factors such as loan amounts, lender type, loan type, repayment duration along with other similar components.

Personal loans interest rates in September 2025

Note: The personal loan interest rates discussed above are illustrative in nature. For updated interest rates, terms, and conditions, refer to the official websites of the respective lending institutions.

5 factors that impact your personal loan eligibility

1. Credit score: A high credit score, preferably over 750, signals creditworthiness and reliability, and boosts the chances of personal loan and credit card approval.
2. Income stability: A regular income consistently generated for years together, either through a job or self-employment, assures lending institutions of your repayment potential. It is a positive sign and signals trustworthiness and integrity.
3. Existing debt burden: A high debt-to-income ratio can lower an applicant's eligibility as lending institutions check an applicant's overall financial liabilities before clearing any loan.
4. Loan amount and tenure requested: Larger loan amounts or longer repayment tenures generally require stricter checks and verifications. With a longer repayment tenure, the borrower will be required to pay higher amounts as interest.
5. Employment type and tenure: Salaried individuals with stable employment histories tend to have higher eligibility scores than self-employed individuals. This simply means that lenders want complete clarity and predictability when they are looking to lend money.

Maintaining a clean and blemish-free credit profile, a high credit score, a steady flow of income, and manageable debt levels for years together are critical constituents to boosting one’s personal loan eligibility. Always compare interest rates, understand the pros and cons, and seek professional guidance before submitting any loan application.

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