October 2022

A sudden financial emergency can hit you at any moment. Be it a medical emergency or a big-budget purchase, unforeseen expenses are unavoidable. Running from one place to another to secure money in these circumstances can be stressful. This was the scenario a few decades ago, but today, with easy financing and instant personal loans, financing has become amazingly simple. With the personal loan app, you can apply for a personal loan and get the amount credited to your account within minutes.

Unlike other types of loans, a personal loan is an unsecured loan and does not ask you to submit any collateral. So, to check whether you are a worthy candidate or not, the bank has a list of eligibility criteria and asks for you to submit some mandatory documents. Individuals who are salaried and self-employed must meet different qualifying requirements and submit relevant documentation. For better understanding, we have provided all the necessary information on personal loan eligibility and documentation if you are applying from a new loan app.

What Are Personal Loan Eligibility Criteria?

Though every lending institute may offer different rates of interest their eligibility criteria are similar to one another. Here’s a list of eligibility criteria for salaried and self-employed individuals.

• Age: You must fall between the age range of 21 to 58.
• Citizenship: You must be a citizen of India.
• Occupation: Open to both salaried and self-employed individuals
• Work Experience: As a salaried employee, you need to have been working for at least six months. In case, you are a self-employed employee, you need to have been in your current industry for at least two years.
• Monthly Income: You must earn at least ₹15,000 every month.
• Maximum Loan Tenure: The repayment terms can be extended up to 60 months.
• Maximum Loan Amount: Usually you can apply for a loan of up to ₹ 5 lakh, but some lenders may offer you an amount than that depending on your profile.

What Are the Factors Affecting Your Eligibility Criteria?

Here’s a list of factors that affects your eligibility criteria for a personal loan:

• Credit History: Your ability to obtain a personal loan will depend on your credit score and credit history. This element will influence the interest rate, loan term, and loan amount you are eligible for.
• Age: Each lender has an age requirement that you must meet to continue the application process. The most common age criteria are between ages 21 to 58.
• Housing situation: Your chances of getting your application accepted are better if you live in your own residence. The cause of this is that renting reduces your discretionary income, which diminishes your capacity to repay.
• Your location: Your residence’s location is an important factor in establishing your eligibility for a personal loan.
• Organization: Your employer will also have an impact on your ability to obtain a personal loan. You come off as having steady employment if you work for a well-known corporation with a strong reputation.
• Existing Credit: Your possibilities of obtaining a new loan will be reduced if you have already taken out a personal loan, to improve your chances, you must pay it back on time.
• Salary: The amount of the loan for which you would be qualified will depend on your income level. Your ability to obtain a personal loan will also be influenced by your income. So, try to maintain a steady income.

What Documents Should You Keep Handy While Applying for a Personal Loan?

Here’s a list of documents you will need to apply for a personal loan as a salaried individual:

Mandatory Documents

• Application form
• Coloured passport-size photo

Identity Proof (any one)

• Aadhaar Card
• Passport
• License
• PAN Card

Residential Proof (any one)

• Passport
• Drivers License
• Ration Card
• Utility Bill
• Aadhaar Card

Income Proof

• Form 16
• A six-month salary slip
• Six-month bank account statement

Residence Ownership Proof

• Property paperwork
• Power bills
• Maintenance bills

Job Continuity Proof

• Current employer letter of employment
• Experience certificate from the previous employer

Now have a look at the list of documents necessary for a Self-employed Individual:

Mandatory Documents

• Application form
• Coloured passport-size photo

Identity Proof (any one)

• Aadhaar Card
• Passport
• License
• PAN Card

Residential Proof (any one)

• Passport
• Drivers License
• Ration Card
• Utility Bill
• Aadhaar Card

Income Proof

• Form 16
• A six-month salary slip
• Six-month bank account statement

Office Address Proof (any one)

• Property documents
• Rent agreement
• Maintenance bill
• Utility bill

Business Existence Proof

• Copy of tax registration
• Proof of shop establishment
• Certificate of company registration

Conclusion

Eligibility criteria and documentation are critical components of the personal loan application process. Your loan will be accepted only if you meet the qualifying requirements. Once you have met the qualifying requirements, you must submit your papers for verification. Once the verification is over, your decided loan amount will get deposited in your bank account and can fulfill all your financial needs.

Retail investors can be divided broadly into two – large-scale and small-scale investors. Large-scale investors are the ones who put a significant amount of money into their investments regularly. Investing could be more than a passive money-making option and rather a part-time for them. But most of the retail investors in India consist of small-scale investors. These include investors who put in a smaller portion of their salary every month in investment options like mutual funds through tools like SIPs. These groups of investors may not be as knowledgeable as large-scale investors, and they mostly look for an easier investment option. That is one reason why many small-scale investors choose multi-cap funds. But what are multi-cap funds, and why are they chosen more? Let us find out.

The need for balance

A balanced portfolio is often the most sought-after quality of an investor. Such a portfolio can ensure that your investment is appreciated and, at the same time, protected. Now, small-scale investors who cannot spend a lot of time perfecting their portfolios regularly will look for easier options to invest in a balanced portfolio. That is where mutual funds come in. They, by default, have a portfolio that is more or less balanced. But different mutual funds will have different characters, and the balance will defer too. For instance, an equity mutual fund will have more equity presence, and the balance will be affected by this too. One reason why multi-cap funds are chosen more could be because they can give you a well-balanced option by default. By how? Let us find out.

Categorization of mutual funds according to market cap

Mutual funds are categorized in multiple ways. Which, one important categorization is based on the market cap of the companies they focus on. Market capitalization, also known as market cap, is the total value of all the shares of a company. It is a dynamic figure and it is calculated by multiplying the number of stocks by the price of each stock. For example, if a company has Rs.1 lakh outstanding shares, the price at Rs.10 at this point, then the market cap of the company is Rs.1 lakh * 10  = Rs.10 lakh.

Large-cap funds

Large-cap funds are those that invest in large-cap companies. Large-cap companies are comaparitevly a safe investment option. This is because they are huge and have already attained stability. Investing in them tends to give you steady buy lower returns.

Mid-cap funds

Mid-cap funds invest in mid-cap companies mainly. Mid-cap companies are not as large as large-caps but they are still considerably big. Investing in them gives considerably stable returns but there is a higher potential for growth as they may still have space to grow. At the same time, they come with slightly higher risk as well.

Small-cap funds

All companies that are too small to be included in the above two categories are called small-cap companies. Small-cap funds invest in them. Investing in small-cap funds comes with a higher risk but they have a higher chance for growth as well.

Conclusion

A perfectly balanced portfolio with companies from the above three market cap categorisations is hard to create manually. This is mainly because the characteristics of these companies could change and it could be hard to monitor regularly.

But multi-cap funds are a solution here. They invest in companies of all three market caps to create a good balance. This balanced portfolio should be able to protect and at the same time, appreciate your corpus. This could be the most important reason why more small-scale investors choose multi-cap funds.

Periodically checking your CIBIL score is crucial for maintaining good credit health. CIBIL score is one of the major factors that impact your eligibility for availing financing, including personal loans. Having a strong score of 750 and above can make you an eligible candidate for an affordable personal loan offer. On the contrary, a low CIBIL score may make it challenging for you to get loan approval at favourable terms and conditions. However, getting approval with a low CIBIL score for a personal loan is not impossible if you follow certain tips.

Four tips to avail a personal loan with a low CIBIL score

• Opt for a low loan amount

Usually, lenders hesitate to approve personal loan applications if you have a low score as it indicates poor credit history and incapability to meet Equated Monthly Instalments (EMIs) on time. When you have a low credit score, applying for a low loan amount may work in your favour. This is because a low loan amount reduces the lender’s risk, which indirectly boosts your loan approval chances. To know the loan amount you should apply for as per your repayment capacity and eligibility, you can use a personal loan EMI calculator.

• Apply with a guarantor or co-applicant

As low CIBIL scores indicate a higher default chance and an enhanced credit risk for lenders, applying with a joint applicant can help. Adding a guarantor or co-applicant shifts the liability of your loan repayments on them if you default on the personal loan. Owing to this reason, the lender’s risk reduces, which makes them less hesitant to approve your personal loan application despite a low credit score. However, keep in mind that your co-applicant must have a high income and a good CIBIL score.

• Show all your sources of income

Your monthly income directly indicates your repayment potential. Usually, a high income with lesser monthly obligations indicates that you have the required funds to meet your EMI payments. As a result, lenders might approve your application even if you hold a low CIBIL score. However, before you hit on the personal loan apply button on the lender’s site, ensure you have a reliable and steady income source. Besides your salary, you may also earn from other sources such as freelance work, rental properties, investments, and more.

• Check if your credit report is up to date

Sometimes, the details in your credit report may not be up to date or there may be incorrect details in your report that may result in a lower credit score. In such cases, you must instantly report the discrepancies to the concerned authorities for correction. Rectifying such mistakes can increase your CIBIL score.

Ending note

Once you apply these tips, make sure to compare loan offers by different lenders so that you can get a good personal loan interest rate. Also, while you can get a personal loan despite a low credit score, work on improving your credit score over time as it will help you when applying for other loans in future.