Personal Loans are a popular credit option due to their apparent advantages. This Loan doesn’t require any collateral and has no restriction on its use. It can be spent anywhere and anytime, whether for education, medical purposes, marriage etc.
When applying for a loan, one question that usually plagues one’s mind is, “how much loan can I get?” Generally, the amount that you can get depends on the lender. Some lenders allow smaller amounts, whereas others are willing to offer more. However, other factors are also considered.
Factors that affect your borrowing capacity
Personal Loan online approval can be assured without hassle if certain attributes are fulfilled.
1. Credit history
A good credit history proves your credibility as a borrower. Since it highlights your current debts, repayment history, etc., the lender can judge how you have managed your previous debts. You will be assigned a credit score depending on your credit repayment history. A higher score indicates that you are a responsible borrower.
So to get the maximum Personal Loan amount, you need to have a high credit score, ideally above 750. Furthermore, your credit history should not have payment delays and defaults. Otherwise, even with a good income and minimal debts, your credit history will limit the amount you can ask for.
2. Current income
Your current income status also plays a role in deciding how much Personal Loan you will get. The reason behind it is your total loan amount will determine the EMI you need to pay. Thus, a higher monthly income means you can easily manage and repay your debt.
Furthermore, to bolster your chances, if you have any secondary sources of income (like rent, investments, etc.), remember to mention them as well. The more the income, the more you can pay off current debts. Hence, the lender will not hesitate to give you a larger amount.
3. Existing debts
Your existing debt also plays a role in determining how much Personal Loan you can get. So if you are already repaying one or more loans, it can affect your credibility as a borrower. Additionally, the credit utilisation ratio of your Credit Card should be considered as well.
4. Fixed obligation to income ratio
The fixed obligation to income ratio is the ratio of your total monthly income to the fixed expenditure. Financial experts say this ratio should be between 40% to 50% of your monthly income.
But if it’s pushing towards 60% to 65%, it is better to lower the ratio first and then proceed further for a loan. If your fixed obligation to income ratio is small, there is a high chance of getting the desired loan amount. It will give you an edge over the lender.
5. Employment status
Your current employment status can help determine whether you are eligible for the loan amount you desire. For instance, if you work for an MNC or a PSU, you have a better chance of getting a higher loan amount, indicating stability.
Similarly, if you have a business that has been in operation for over two years and offers a good turnover, you can apply for a high Personal Loan amount.
Hopefully, now you know where to focus on securing a more considerable loan quantum.
Top 3 tips for an easy Personal Loan approval online
Here are some tips to get a Personal Loan approval easily:
1. Check out the eligibility parameters
Check out the eligibility parameters of your preferred lender, and understand them. Make sure you fulfil those criteria to get your expected loan amount.
2. Keep the documents handy
Personal Loans online approval only requires a few documents for verification. You will only need ID and address proof, bank details etc. Moreover, check what other documents your lender requires for the loan processing. Keep the documents ready and organised to make the procedure simple and less time-consuming.
3. Be careful while filling up the loan application form
Fill out the application form carefully. Double-check the details you enter and make edits as necessary before submitting.
Conclusion
In the current scenario, getting a Personal Loan is not a big issue, but getting the desired amount can be. By following the aforementioned tips, you can get your desired loan amount hassle-free. But remember to apply for the amount you require and not what the lender provides so that the debt remains in your control and you don’t default.
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