Should you apply for a personal loan if you are a salaried individual

If you are salaried individual and find yourself faced with an urgent liquidity need, applying for a personal loan is ideal for you. Their flexible terms and ease of processing makes personal loans one of the most sought after in the country.

Who are salaried individuals?
Salaried individuals are people who are working for some firm, government or private, and they draw a monthly fixed salary for the services they provide. Since salaried individuals have a fixed and constant source of income, they are ideal borrowers for banks. Most banks tend to offer attractive personal loan terms to these individuals.

Loan eligibility criteria for salaried individuals:

1. Tenure of service: In order to be eligible to apply for a personal loan from any bank or other private lending institution, a salaried individual should be employed for at least a year. The greater the work experience, the easier it is to get the loan application approved.

2. Minimum age: Though different banks have different minimum age criteria for accepting personal loan applications from salaried individuals, most mandate that you should be at least 21 years old. However, this is not always the case. For example, a leading private bank stipulates that salaried individuals need to be at least 28 years old to apply for personal loans.

3. Maximum age: Generally,  you can get your personal loan application approved by the bank of your choice if you are less than 65 years old at the maturity of the loan term. Hence, if you apply for a two-year personal loan at the age of 64, chances are higher that the bank would reject your application.

4. Income: In order to be eligible for a personal loan through a bank, you have to draw a minimum salary every month, which varies from bank to bank. But generally, if you are earning at least Rs. 15,000 every month, you will be eligible for a personal loan.

5. Credit score: Your credit score is the most important thing that banks look at when they consider advancing you a personal loan. You have to maintain a minimum score of at least 700 if you do not want to risk your personal loan application being rejected by your bank. This score can be less if you are taking a loan from a private lender.

Personal loans come in very handy when you are in need of cash urgently. These loans take less time to process and lesser documentation is required. While personal loans come at a higher interest rate than all other types of loans, since they can be used for any purpose, these loans are one of the most attractive options available in the lending market.

Disclaimer: This Article is for information purpose only. The views expressed in this Article are personal and do not necessarily constitute the views of Kotak Mahindra Bank Ltd. and its employees