Personal loan is not easy to get and you have to know the rules if you would like to process your application sooner than you think it would take. The eligibility criteria for personal loans varies from bank to bank. Although some of the requirements are age, occupation, and income of the applying person. Especially, if you are taking an emergency loan online or an instant personal loan, make sure you have the documents in your hand before they send you back for more.
The eligibility criteria also affect the credit score of the person applying for the loan. The credit score gets impacted due to unpaid credit card bills and extensive EMI outstanding in other loans.
The personal loans also affect the credit score, if it is irregularly maintained. If the EMI withstand for more than three months, then it will directly affect the credit score. If the credit score gets impacted, it will have a black mark in your bank profile.
As per your eligibility criteria, the bank offers you a certain amount, and it’s your wish to take it entirely, or you need a borrow the necessary amount.
The minimum loan amount for every account is #30, 000, and the loan amount directly depends upon the monthly income of the borrower. The credit score also determines the amount that can be sanctioned to a person. For a higher personal loan amount, the credit score should be around 900. The highest credit score shows that you’re a reliable person to lend money. Another aspect of determining the amount of loan is the type of occupation. For example, the amount depends on the borrower, whether he is self-employed or salaried.
If the person has a good income, he can apply for the amount needed. The maximum loan can be limited by showing that the EMI amount should not be more than the borrower’s 40-50% of monthly income. The same applies to Home Loan.
There are two types of payment methods in bank loans. But they are inclusive of taxes.
Prepayment method – The prepayment method is the amount paid as a sum, but less than the principal amount. The prepayment method will lessen the interest because it skips some EMI period. Thus the banks will apply a 2-5% tax on the total withstanding amount for this prepayment method. It will compensate for the loss of banks due to prepayment.
Preclosure Method – The foreclosure method is similar to the prepayment method, with the only difference is paying off the debt altogether. This preclosure method is better than the prepayment method as it completes your debt. Here also, the tax is about 2-5% of the preclosure of a loan.