With the rising costs of almost everything today, more people have started relying on Instant Personal Loans for meeting considerable financial shortfalls, for both personal and professional purposes: planned or unplanned. By leveraging digital technology, banks and NBFCs have made these loans easily accessible online with easy eligibility criteria and minimal documentation.
Digital NBFCs like Hero Fincorp have launched 100% digital loan procedures to make Personal Loans instantly available to borrowers: without the need for any visits or physical paperwork. However, borrowers must understand their eligibility for a Personal Loan before applying for a loan. This can be done quite easily and accurately with an online Personal Loan calculator. They can determine the costs and see how their eligibility stacks up for the loan, and plan their loan application appropriately. Let’s figure out what a Personal Loan eligibility calculator is, how it works, and the benefits it brings.
What is a Personal Loan Eligibility Calculator?
A Personal Loan eligibility calculator is an online tool that allows users to accurately calculate and evaluate the loan amount they are eligible to borrow. The tool uses parameters like the applicant’s income, DTI ratio, and repayment capacity to determine eligibility. After knowing the amount an applicant is eligible to borrow, they can apply for an adequate loan amount with higher chances of approval.
Benefits of Using a Personal Loan Eligibility Calculator
Calculating eligibility for a Personal Loan has been greatly simplified with technology. These are the benefits of using this online tool.
- Saves Time : A Personal Loan eligibility calculator saves a substantial amount of time by giving results within seconds of entering the required details. It can compute loan eligibility for multiple lenders automatically without time lags. On the other hand, the traditional way of calculating loan costs and determining eligibility is much more time-consuming. Consequently, loan seekers can decide on the amount that meets their funding requirements without stressing their budget.
- Gives Accurate Results : An online eligibility calculator delivers accurate results in seconds, helping applicants plan their loan application as suitable to their monthly budget. There is almost no chance of errors occurring while calculating loan eligibility.
- Eases Loan Comparison : Borrowers can easily compare various loan options to find the best loan offer. Loan providers are highly flexible in offering loan amounts to applicants based on their eligibility.
- Helps With Financial Planning : Whatever amount an individual borrows, they must repay it to the lender along with interest. An eligibility calculator gives an estimate of the appropriate loan amount, helping borrowers check their finances and decide whether they can afford it or not.
- Prevents Loan Rejection : Using an eligibility calculator, the loan seeker comes to know the loan amount they are eligible to borrow for based on their income and financial commitments. For example, if an individual needs a Rs 1 lakh loan and their eligibility meets the provider’s criteria, they can get the required amount quickly. However, if the calculator shows insufficient loan availability, they must work on the requisites to improve their eligibility. Therefore, it helps prevent loan rejection.
- Helps Plan Accurate Repayment : A loan calculator helps calculate the loan amount based on whether the borrower meets the eligibility criteria for the amount they desire. According to the results, the calculator clearly defines the repayment without any delays.
Factors That Impact Loan Eligibility
While a Personal Loan eligibility calculator gives an approximate idea of the appropriate loan amount, here are a few factors that impact an individual’s eligibility.
- Credit History : It indicates how the applicant manages their current credit bills, based on which lenders decide if they are reliable borrowers.
- Income : Lenders consider the applicant's monthly income, including tax credits and bonuses. Based on this, they determine the loan seeker's repayment capacity and offer them an adequate loan amount.
- Financial Commitments : Loan providers scrutinise the part of the monthly income the applicant spends on other financial commitments. It helps them evaluate the loan size and make a loan offer.
Determining the Loan Amount to Borrow
The loan amount an individual should borrow depends entirely on their financial situation. It is always wise to apply for an amount they can comfortably repay without any struggle. With a Personal Loan eligibility calculator, borrowers can calculate the EMIs for that amount and see how they impact their monthly budget.
Before borrowing a loan, consider what might happen in the near future. During the loan tenure, borrowers may need to deal with increased expenses, which they must consider while applying for instant Personal Loans. That said, one must consider borrowing a loan amount that fulfils their current financial need without stressing future finances.
Tips to Get a Bigger Loan
If the loan calculator suggests a borrower is eligible for a lower amount than they require, they must follow these tips to get a bigger loan sanction.
- Maintain a High Credit Rating : A decent credit score enables a borrower to negotiate a bigger loan amount at a low-interest rate.
- Increase Income : A higher income indicates better loan affordability, convincing lenders to approve a bigger loan amount.
- Reduce the DTI Ratio : Those with a DTI ratio of less than 30% prove higher credibility. So, they qualify for bigger loans without hassle.
- Opt for a Longer Tenure : Opting for a longer tenure makes EMI repayment easier, making lenders confident enough to sanction a bigger loan.
- Avoid Multiple Loan Applications : Multiple loan applications result in several hard enquiries on the applicant’s credit report, projecting them as credit-hungry borrowers and reducing their eligibility.
- Maintain Job Stability : Changing jobs frequently reduces job and income stability, making lenders sceptical and reducing the borrower’s eligibility.
Calculating the loan amount for various lenders is tedious and time-consuming for many. However, by using an eligibility calculator to calculate eligibility for a Personal Loan, prospective borrowers can ascertain the amount they are eligible to borrow and make informed decisions. These personal calculators give quick results and are easy to use, making the loan procedure easier and decisions: more informed.