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Personal Loans: How Eligibility Criteria Vary for Banks & NBFCs?

Updated on: 14 Dec 2021 // 28 min read // Personal Loans
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Before you apply for a Personal Loan, you must know that there are certain differences between the Personal Loan eligibility criteria for banks and those for non-banking financial companies (NBFCs).

Let us understand these differences with some examples.

Personal Loan Eligibility Criteria for Banks (Salaried Individuals)

When it comes to offering personal loans, most banks have distinct eligibility criteria for salaried individuals, as they are considered to have a more stable source of income, and thus pose a lower risk propensity.

A vast majority of banks levy the following criteria for salaried individuals seeking a Personal Loan:

  • The applicant must be between 25 and 60 years of age
  • The monthly income should be Rs. 20,000 (and that of Rs. 25,000, if living in a metro city)
  • The applicant must have a minimum work experience of 2 years, with at least 6 months of employment in the current organisation
  • The applicant must have a CIBIL Score ranging from 750 to 900

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The loan amount in this case usually varies from Rs. 50,000 to Rs. 50 Lakhs depending on the repayment capacity and credit history of the applicant.

Personal Loan Eligibility Criteria for Banks (Self-Employed Professionals)

In case of self-employed individuals, whether business owners or professionals, banks are forced to consider a higher risk proposition owing to the unstable stream of income. Therefore, the eligibility criteria for them are comparatively stringent.

  • The applicant must be between 25 and 60 years of age
  • The minimum monthly income of Rs. 30,000 (and that of Rs. 35,000, if living in a metro city)
  • The applicant must have a minimum work experience of 2 years, with at least 6 months of employment in the current organisation
  • The applicant must have a CIBIL Score of 750 to 900

A self-employed individual can Apply for a Personal Loan of minimum Rs. 50,000, just like salaried individuals. However, the maximum loan amount is completely dependent on the earnings as well as the repayment capacity of the applicant.

Let us now take a quick look at the eligibility criteria of some of the leading banks of the nation.

HDFC Bank Personal Loan Eligibility Criteria

HDFC Bank Personal Loan can be availed by employees of private limited companies as well as those of public sector undertakings, including central, state, and local bodies. To apply for this loan, the individual must –

  • Be between 21 and 60 years of age
  • Have held a job for at least 2 years, with a minimum of 1 year with the current organisation
  • Earn at least Rs. 15,000 per month or Rs. 20,000 if living in any major city such as Mumbai, Delhi, Bengaluru, Chennai, Hyderabad, Pune, Kolkata, Ahmedabad or Cochin

United Bank of India Personal Loan Eligibility Criteria

Let’s look at eligibility criteria for Indian government-owned United Bank of India. The applicant should meet the requirements:

  • Should be a salaried individual
  • Have an employment history of at least 2 years
  • Should be willing to repay the loan over a maximum tenure of 36 months

Personal Loan Eligibility Criteria for NBFCs

When it comes to NBFCs, the most commonly imposed eligibility criteria for Personal Loans are as follows:

  • The applicant must be between 25 to 60 years of age
  • The applicant should enjoy a monthly income of Rs. 40,000 and above
  • The applicant must have an employment history of at least 2 years
  • The applicant should have a high CIBIL Score, preferably 650 and above

Here’s a quick purview of the eligibility criteria for Personal Loans from some of the most popular NBFCs in India:

Bajaj Finserv Personal Loan Eligibility Criteria

Bajaj Finserv Personal Loan can be availed by any salaried employee working for a private or public company, or an MNC. To be eligible for this loan, the applicant must:

  • Be between 23 and 55 years of age
  • Be a citizen and a resident of India
  • Have a minimum monthly salary of Rs.35,000 if living in Bangalore, Delhi, Pune, Mumbai, Hyderabad, Chennai, Coimbatore, Ghaziabad, Noida or Thane
  • Have a minimum monthly salary of Rs.30,000 if living in Ahmedabad or Kolkata
  • Have a minimum monthly salary of Rs.28,000 for those residing in cities Jaipur, Chandigarh, Nagpur, Surat, and Cochin

IIFL Personal Loan Eligibility Criteria

The IIFL Personal Loan can be availed by salaried individuals only. To be eligible for this loan, the applicant must –

  • Be between the age of 25 to 60 years of age
  • Have a minimum monthly income of Rs. 35,000 or more
  • Be able to furnish an address proof in Delhi, NCR, Mumbai, Bengaluru, or Pune
  • Have at least 2 years of total work experience
  • Have a minimum of 6 months of work experience in the current organisation

Sriram Finance Personal loan eligibility Criteria

To avail Shriram Finance Personal Loan, an applicant must be an existing or old customer of any of the entities of the Shriram Group. Salaried and self-employed individuals can also apply for this loan, provided that the salaried employee has an employment history of at least 1 year with the current employer, and the self-employed individual has a work experience of at least 2 years.

 In addition, the applicant must:

  • Be at least 25 years of age at the time of applying
  • Not be older than 59 years at the time of loan maturity
  • Not have any cheque bounces under their name
  • Furnish the declaration of current loan commitments (if any)
  • Should be residing in the current place of residence for at least 1 year

Measures to Improve Personal loan eligibility

  1. You should have a minimum monthly income of Rs. 25,000 to be eligible for an unsecured loan product such as Personal Loan. If, however, your income is on the lower side, you can pledge collateral for the loan. Yet another way to enhance your eligibility is to co-apply for the loan with your parents, spouse, siblings, or children. Moreover, you can also try negotiating with your bank to consider your eligibility for the loan, especially if you enjoy a good credit score of 750 or above.
  2. Paying off your existing loans can also help improve your Personal Loan eligibility.
  3. If your Credit Score isn’t sufficiently high, you can try improving the same by repaying your Credit Card bills and other EMIs in a timely manner.
  4. A good company profile or a high salary, or both can significantly enhance your Personal Loan eligibility.
  5. You can also try consolidating your existing debts to a low-interest loan, which would reduce your EMI obligation, thereby improving your eligibility criteria.

Now you can successfully compare various Personal Loans from Banks and NBFCs and make an informed decision.

Also Read: Your CIBIL Score & Personal Loan: Understand the Relationship

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