What Does Personal Loan Mean? How Does It Work?

A personal loan is an amount that you can borrow for various purposes. A personal loan might be used to repay your debt, used for home renovation, or plan a wedding in your family. Personal loans may be subject to fees from some lenders.

To get a personal loan, you must submit an application to a lender. This might be a credit union or an online personal loan provider.

Just like in most cases, you’d start by filling out an application. It is reviewed by us, after which you get an instant notification if we accept or refuse it. Fullerton India does instant checks on the application on personal loans. If you’re authorised, you’ll be given loan conditions to accept or refuse. The next step is to complete your loan papers if you agree to our conditions.

After that, Fullerton India will finance the loan; this means you will receive the funds. These may arrive in the form of a direct transfer into your bank account or a cheque, depending on the lender. After the loan has been funded, you are free to use the funds as you see fit. After then, you must begin repaying the loan according to the conditions of your loan arrangement.

How Does Income Impact Your Loan Limit?

Based on your income, the lender will determine a debt limit for you. Your income will have a significant impact on your repayment ability. You can use a personal loan to clear off debts, cover medical bills, cover wedding expenditures, further your education, arrange a trip, and so on. 

If your income is insufficient to fulfil your payment commitments, you can add a co-borrower, such as your spouse or another family member. The bank or NBFC determines your loan eligibility based on the credit record of the co-applicant. You might easily acquire a bigger loan amount if your salary is high and your credit score is strong.

Personal loans may now be obtained in as little as 24 hours, thanks to fast lending applications that have replaced traditional loan application processes. To qualify for personal loans online, most financial institutions require a monthly income of at least Rs.15,000 in most cases.

Lenders also like to know how much money you have left after the mentioned Equated Monthly Installment (EMI) is deducted from your net monthly income (NMI). The lender will usually set the personal loan amount such that the overall liabilities, including the planned EMI, are less than 50% of your monthly income. However, depending on your income bracket, that proportion may vary.

How to Consider Loan Eligibility?

Checking your eligibility is beneficial to you since it enhances the likelihood of your loan getting approved fast. Income, age, repayment ability, and other variables are used to determine your loan eligibility. You’ve seen how income impacts personal loans, which is why there are personal loan calculators that can help you figure out how much of a loan you’re qualified for based on your monthly wage.

Let’s Have a Look at The Requirements for Obtaining a Personal Loan: 

  • As evidence of income, a six-month bank statement and a payslip are required.
  • An applicant’s age qualifying conditions range from 21 to 58 years old.
  • You must be a working or self-employed individual earning at least Rs.15,000 per month.
  • You should be employed in the private or public sector.
  • Your credit history must fulfil the lender’s requirements. Various lenders establish different requirements for credit scores; thus, your credit score may vary.

How To Check Loan Eligibility with A Personal Loan Eligibility Calculator:

Before submitting the loan application and documents, simply follow a few easy steps to use the eligibility calculator to determine your loan amount.

  • Enter your home address as well as the state or city where you live.
  • Enter your age and or date of birth.
  • If you are a paid employee, enter your monthly payment.
  • Otherwise, self-employed professionals must report their yearly profit after paying their taxes.
  • If you have any outstanding EMIs or credit card debts, enter them.
  • Name of the organisation where you’ve been employed.
  • Proof for business stability with turnover and profit & loss statistics over the last 2-3 years.

PAN card, paycheck slips, and bank statements from the last six months are among the documents necessary to investigate an applicant’s financial soundness. These financial records provide lenders with information on the borrower’s professional stability, debt history, and current debts if any. If you don’t fulfil the personal loan eligibility requirements, don’t apply for a loan since you’ll be delayed or denied.