Why use a personal loan eligibility calculator before applying

What does an eligibility calculator tell you before you apply

A personal loan eligibility calculator estimates the loan amount your income can support after accounting for existing EMIs. It can also show the EMI for a chosen amount and tenure. Many lenders assess total EMIs against income using a range of about 40% to 60%, although the applicable limit varies.

• Maximum amount: It converts the EMI room left after existing obligations into an estimated loan amount.
• Tenure trade-off: Extending a loan from 24 to 48 months can reduce the EMI substantially but increase total interest.
• Effect of closing a loan: At an illustrative 15% a year over 36 months, every Rs. 1,000 of existing EMI you clear creates room for about Rs. 28,800 more borrowing.
• Fit check: Enter the amount you actually need to see whether the resulting EMI leaves room within your estimated capacity.

The result is an estimate, not a loan offer. The final amount and rate depend on the lender's assessment of your application.

Does checking eligibility hurt a borderline credit score

Checking your eligibility through a calculator does not hurt your credit score because the calculation does not involve a credit report enquiry. A formal loan application can result in a hard enquiry when the lender checks your credit report.

Several hard enquiries within a short period can affect how subsequent lenders view your credit applications. This becomes more relevant when your score is close to the minimum accepted by a lender.

A score below 700 does not automatically rule out borrowing, but some lenders may offer a lower amount or a higher rate. Using the calculator first lets you test the amount and EMI before deciding whether to submit an application.

How much can you borrow on a Rs. 52,000 salary

On a monthly salary of Rs. 52,000 with an existing EMI of Rs. 2,400, you could borrow about Rs. 6 lakh over 36 months if a lender caps all EMIs at 45% of net income and charges 15% a year. Both figures are illustrative. A higher limit or lower rate could change the estimate.

Take Kabir, 29, a physiotherapist in Kochi who is moving to Delhi for a job at a clinic. He needs money for a deposit, brokerage and equipment.

The Rs. 2,50,000 Kabir needs uses only about two-fifths of his available EMI room. His loan requirement therefore fits comfortably within the illustrative calculation. The variable is his CIBIL score of 688 and the rate he may be offered. A personal loan eligibility calculator lets him test the EMI at different rates before submitting an application.

What to do once the calculator says you qualify

Once the calculation fits your requirement, prepare your income and address documents before submitting an application. You should then compare the final offer by its annual percentage rate (APR) and review the Key Facts Statement (KFS) before signing.

1. Check service availability: Confirm that the lender serves your city and PIN code.
2. Prepare address proof: If you have moved, keep a registered rent agreement or recent utility bill ready. Update your Aadhaar address if required.
3. Update employment records: If you recently changed jobs, keep your offer letter and first salary slip available. Check whether the lender has a minimum employment period.
4. Submit one application: Approval depends on your eligibility and document verification.
5. Compare the offer: For a personal loan in Delhi, compare the final offer with any other quote using APR rather than only the headline interest rate.
6. Read the KFS: Check the APR, applicable charges and repayment schedule before signing.

What should you do before you submit a loan application

A personal loan eligibility calculator can settle the borrowing-capacity question before you submit a formal application. The final interest rate still requires an actual lender assessment.

For Kabir, the calculation showed that his Rs. 2,50,000 requirement was within the illustrative EMI capacity. His next step is to compare the rate and terms available for his profile rather than apply for more than he needs. Before submitting your application, run the calculation again using your latest income and existing EMI figures.

Terms and conditions apply*.

 

The content above is funded by Bajaj Finance and does not represent the viewpoint of The Secretariat.