The advantages of availing a versatile debt instrument like a personal loan are associated with the flexibility of using the funds as the way the borrower deems fit. Any short-term financial requirement under the sun, except for one or two instances that are speculative in nature, the individual can avail a personal loan for a wedding, higher education, for a family vacation, foreign trips, home renovations, medical emergencies, for a purchase or even a cosmetic procedure. These loans are generally collateral free and the applicant need not furnish any asset as mortgage security. With the right bank or Non-Banking Financial Company to avail the loan from, the applicant can benefit from the low rates of interest and flexible tenures of repayment.
When opting for a personal loan, the applicant needs to consider the eligibility conditions related to the age, income, employment stability, existing financial liabilities and credit history and score. As these are unsecured in nature, the chosen lending institution needs the assurance that the borrower has a stable job and his/her financial liabilities are not too high. Moreover, the credit score has a very important role to play here as lending institutions decide on its basis if the applicant is financially trustworthy to avail an unsecured loan. Higher the credit score, lower is the rate of interest charged by the lending institution. In addition to the rate of interest, the credit score determines how much the applicant should borrow.
There are several banks and Non-Banking Financial Companies (NBFCs) that provide Personal Loan eligibility calculator. These are free online tools that can be used to assess the eligibility of an individual and the maximum amount he/she can borrow.
Additional Reading: Boost Your Personal Loan Application By Calculating Your Loan Eligibility
Aman Khanna is an experienced financial advisor who is well known for his ability to foretell the market trends as well as for his financial astuteness. He has an MBA in finance from Toronto University as well as years of experience delivering seminars on sound financial practices and debt management.