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Know How Your Age Impacts Your Eligibility to Opt for a Personal Loan
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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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Is there any correct time to opt for a personal loan? The answer is no. A personal loan is used by different people to meet their different types of needs. And the need for a personal loan can come up anytime. For instance, a father may take up a personal loan to meet his child’s higher education costs, an ageing mother may opt for this loan to meet her child’s wedding expenses, a married couple may avail this loan to renovate their newly bought home, a daughter may apply for it to pay for her father’s medical bills, etc.
While there is no right time to avail a personal loan, for getting approval your age is the initial parameter checked by the lenders. Personal loan eligibility parameter differs for different ages. Read on to know how your age impacts your personal loan eligibility criteria.
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Does your age impact your personal loan eligibility?
Yes, age is a major personal loan eligibility criterion. Most lenders allow you to avail this loan only if you fall between 21 and 60 years of age. Individuals below 21 years are not eligible for personal loans as they are usually college students and are dependent on their parents for money with no job. On the other hand, older individuals, those over 60 years, may not be provided personal loans because for most this is the retirement age, and the assurance of monthly cash inflows is minimal.
While those between the age group of 21 and 60 years certainly meet the age criteria for securing a personal loan, this doesn’t guarantee loan approval. With age comes other parameters like credit score, job experience, and job stability and income, which are examined by the lenders. All these parameters can impact your personal loan approval. Thus, age influences other parameters that can impact your application for a personal loan.
Income – A 40-year-old manager surely earns way more than a newcomer aged 24 years. The newcomer obviously can work their way up the ladder and with age reach the same position as their manager. However, right now, the latter earns lesser than the former. Remember that personal loans are unsecured in nature and hence, lenders might extend the loan only if you have a high repayment capacity (mostly analysed by examining your income) and a strong credit profile. Thus, an older individual with a high income may have a slight edge over younger individuals.
Credit history – An individual who just began his professional career is unlikely to have a credit profile. Having no or low credit profile often discourages lenders from approving your personal loan. This is because a poor or low credit profile often shows that you as an individual are prone to default in the future. You can form a credit profile by opting for a credit card and ensuring to repay your dues in full on time. With time as you repay your full outstanding dues, your credit profile will be built, which may boost your chances of securing a personal loan.
Holding a strong credit profile may also make you eligible to avail an instant personal loan. Unlike regular personal loans, which are disbursed in two to seven days, instant personal loans are preapproved in nature and are disbursed on the same day of submitting the application.
Employment history – The third important personal loan eligibility criterion is your employment history. Lenders check how long you have been employed. Besides this, they also check how many jobs you have switched. In case you have switched a lot of jobs over a short time period, lenders may not prefer lending to you. This is because they view a lot of job switches as a sign of financial instability and the chances of defaulting in the future are considered higher. They may prefer lending only if you have steady employment with the same company for a long time period.
Ending note
If you are aged between 21 and 60 years, then you meet the age criteria for securing a personal loan. However, before you apply for a personal loan, note that age is not the only factor considered by lenders. They also consider other parameters like your credit profile, employment history, and income. Failing to meet any of the criteria does not necessarily meet outright rejection as few lenders may still consider lending to you at a higher personal loan interest rate.
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