The evaluation of personal loan eligibility is a crucial step in personal loan approval process. Lenders assess the creditworthiness of the applicants by evaluating their personal loan eligibility based on several factors. Among these factors, age plays a key role in determining the eligibility of personal loan applicants. Lenders assess the applicant’s age to calculate the credit risk involved. As per the eligibility criteria set by most lenders, the minimum age of the applicant at the time of loan application should be around 18 years whereas the maximum age of the applicant at the time of loan maturity should be 60 years. The eligible age varies across lenders. Read on to know how age affects the eligibility of personal loan applicants.
How does Age Influence the Personal Loan Eligibility
Age plays a significant role in evaluating the personal loan eligibility of an applicant. Let us have a look at how an individual’s age influences his/her personal loan eligibility.
Loan Tenure
The eligible age set by the lenders for personal loan applicants lies between 18 to 60 years. However, individuals should not apply for personal loans around the maximum age. This is because individuals planning to avail personal loans at an older age will be offered a very short repayment tenure. For instance, a 57 year old would avail a personal loan for a tenure of only 3 years. Such individuals may then opt for other credit options, such as Loan Against Securities, Gold Loan, Top-up loan in case of an ongoing home loan, etc.
Retired Individuals
Retirees or individuals above 60 years of age are not eligible for availing personal loans. Such applicants, if previously employed with the government sector, may opt for pension loans through banks and NBFCs. Note that, the lenders offer pension loans only to individuals drawing their pension through them.
Employment Term
Younger individuals have a longer employment term as compared to older individuals. Therefore, the lenders might consider younger applicants over older applicants due to repayment certainty. Older individuals approaching their retirement carry a high risk of credit default, and hence, have lower chances of availing personal loans or might avail loans for a shorter tenure.
Tips to Improve Personal Loan Eligibility for all Age Groups
Below mentioned are a few tips that would help the applicants to improve their personal loan eligibility thereby easing off their personal loan approval process.
- Maintain a good credit score of 750 and above.
- Avoid taking multiple loans
- Add a co-applicant with a good credit profile
- The EMI/NMI ratio of the applicant should not exceed 50-55%
- Maintain a stable employment history
Age is a crucial factor in determining the personal loan eligibility of the applicants. However, it does not dictate an applicant’s personal loan eligibility. Other factors that impact the eligibility of personal loan applicants include credit score, minimum monthly income, EMI/NMI ratio, employment profile and work experience. In order to qualify for a personal loan, applicants should meet all the eligibility criteria set by the bank/NBFC.
