When planning to apply for a Personal Loan, understanding your eligibility is one of the first steps. However, many people make common mistakes that can either delay the approval process or result in rejection. Checking Personal Loan eligibility might seem straightforward, but certain missteps can complicate things unnecessarily.
In this article, we’ll go through the most common errors when calculating Personal Loan eligibility and how to avoid them.
Top Mistakes in Personal Loan Eligibility Calculation & How to Avoid Them
1. Not Checking Your CIBIL Score
Your CIBIL score is like a mirror of your financial behavior. It shows the lenders how good (or bad) you’ve been with your previous loans or credit cards. Still, many people overlook this crucial step.
A good CIBIL score, typically above 750, shows your reliability with repayments. On the other hand, a lower score could lead to higher interest rates or outright rejection.
Why it matters: Lending institutions use your CIBIL score to find out how risky it would be to lend to you.
How to avoid this mistake: Regularly check your credit report and ensure there are no errors or overdue payments.
2. Ignoring the Lender’s Eligibility Criteria
No two lenders are the same. Each one has its own checklist—age, income, type of employment, and even your location. Overlooking these small but important details can waste time and energy.
Minimum income requirement: Most lenders require you to have a steady monthly income of at least Rs. 15,000 or more, depending on the city.
Employment type: Some only accept applications from salaried individuals or self-employed professionals.
3. Applying with Multiple Lenders Simultaneously
This might sound like a good idea. Spread your applications around, and increase your chances of getting a loan quickly. However, every time you apply for a loan, lenders pull your credit report, and these “hard inquiries” can lower your CIBIL score.
Impact: Multiple inquiries make you look like you rely on credit way too much, which is a red flag for lenders.
How to avoid this mistake: Research and select one or two lending institutions that match your profile before applying.
4. Not Using a Personal Loan Eligibility Calculator
Online Personal Loan eligibility calculators are free and easy to calculate Personal Loan eligibility. Yet, so many people skip using them. However, these tools are simple and provide a quick estimate of how much you can borrow. Skipping this step often leads to applying for amounts that exceed your eligibility.
Impact: You might lose the opportunity to cater to different estimations of taking different loan options.
Benefits of an eligibility calculator: It considers factors like income, age, and existing debts to give you an accurate borrowing range.
5. Neglecting Employment Stability
If you’ve switched jobs recently or are still in your probation period, that might be a red flag for lending institutions. They want stability, especially for salaried applicants. Stability reassures lenders that you have a consistent income to repay the loan.
What lenders look for: At least 6–12 months of employment in your current role, especially for salaried individuals.
How to avoid this mistake: Wait until your probation period is over or provide proof of consistent income from previous jobs to improve your chances.
6. Ignoring Existing Debt Obligations
Many applicants fail to consider their current debts when applying for a Personal Loan. If you’re already paying high EMIs on another loan or have maxed out your credit card, lenders may hesitate to approve your loan.
Why it matters: Lending institutions evaluate your repayment ability by looking at your existing obligations.
What to do: Clear smaller debts or consolidate loans to reduce your overall financial burden before applying.
7. Providing Incorrect or Incomplete Information
Submitting inaccurate details during your application process can result in delays or outright rejection. Lenders cross-verify the information you provide, and inconsistencies can raise red flags and hinder the process to get instant Personal Loan.
Common mistakes: Incorrect PAN or Aadhaar details, mismatched income figures, or incomplete forms.
How to avoid this mistake: Double-check all the information before submitting your application.
8. Failing to Clarify Terms and Conditions
Reading the fine print at the end of the agreement is a crucial step. Failing to do so can leave you stuck with hidden charges, penalties for prepayment, or other unexpected surprises.
How to avoid this mistake: Read the loan agreement carefully and ask the lender to clarify any doubts before proceeding.
Conclusion
Checking creditworthiness to get an instant Personal Loan is a very important step in the process of borrowing. Indeed, by avoiding common mistakes, for example, ignoring your credit score, or skipping eligibility calculators; you can get a loan quickly and efficiently. Always, of course, be mindful of lender criteria, state facts correctly, and clarify terms before signing the agreement.
Avoiding these common mistakes makes you one step closer to getting a Personal Loan without any hassles.
