Other than the interest rate charged on a personal loan, your age also plays an important role in deciding whether you are eligible for the loan or not. Other than your monthly income, the lender also looks at your age and also the tenure which you have selected for the loan repayment. Your age and tenure help the lender determine your repayment capacity, personal loan eligibility for approval and also the monthly EMIs which you will pay.
Why is age an important factor for your loan approval?
If you are a young applicant, then there are chances that you can get an extension on your tenure. The minimum age for a loan applicant is 21 years and the maximum age of an applicant at the time the tenure ends needs to be 60 years. Every bank or an NBFC will have a maximum tenure period for a personal loan. Usually, the maximum loan tenure for a personal loan ranges between 5-6 years. In such a case, if a borrower is of 55 years then there is no chance for an extension as the applicant is already in his/her 50s and the only option that remains is to increase the EMIs.
Also, when your age is low the lenders expect your earning capacity to grow incrementally as compared to older applicants. Age as a parameter is important to consider for your personal loan eligibility. As you reach your ’50s, the rate of increase in your potential income starts receding as compared to the income in your mid ’20s or ’30s.
When you apply for a personal loan during your ’20s or ’30s, your loan eligibility increases. This because there is a high chance of an increase in your income or salary over a period of time. Lenders are vigilant enough to see if you can do timely payments during your loan cycle.
If you are a salaried employee, then it is an assurance to the lender that you can do timely repayments of the EMIs. To top this, if you fall in the prime age bracket then this increases your chances of eligibility. You can choose a longer tenure for repayment. This way you can easily manage your monthly expenses. You can use the personal loan EMI calculator to get an estimate of the monthly EMIs.
Hence, when you decide to take a loan, do not just look at the personal loan interest rate but also see if your age is in your favor or it is a hindrance to your loan application.