Do My Education and Qualification Affect My Personal Loan Application?

Availing a loan is one of the easiest ways to fulfil your monetary needs. Be it for buying a car, purchasing a house, starting a business or simply taking a vacation; loans can prove to be an extremely effective way of obtaining the required finance when you need it.

A Personal Loan application is just the first step towards loan approval. Once you submit it, the lender examines various aspects such as your income, job continuity, past repayment record, credit score, and so on. For most purposes, there is a set of fixed objective criteria on the basis of which your application is reviewed. However, there are also a number of other factors which influence your Personal Loan prospects with your education and qualifications being one of them.

Which Fixed Criteria Do Banks Use to Evaluate Loan Applications?

To make a rational decision about your Personal Loan request, banks evaluate your profile based on the following factors:

· Repayment Capacity

Your repayment capacity as a borrower is evaluated on the basis of your income, employment status, and existing obligations. Lenders usually are in favour of borrowers who have a good repayment capacity and can pay their monthly equated monthly instalments (EMIs) without delay.

· Assets

The lender also considers the value of the assets that you own, which primarily includes property, deposits, and other financial assets before granting you a Personal Loan. The lender verifies ownership, determines the value of the capital, and checks whether you have used the same capital to avail any other loans. This is because this capital can be pledged as collateral to avail a loan (in case of secured Personal Loan).

· Creditworthiness

The lender evaluates your credit score from organisations like CIBIL. The credit score carries your entire credit history, including information about loans which you have taken in the past. If your credit score is good, it increases your chances of getting a loan approval.

Do Education and Qualification Really Matter?

Apart from your financial background, Banks will also consider a couple of other factors which might affect your prospects. These considerations vary from bank to bank and lie completely at the discretion of the lender. This is where your education and qualifications might be examined.

· Education

No lender can deny you a Personal Loan on the grounds of lack of education. However, having a good academic record does help strengthen your case, especially if you are applying for a bigger amount. A good education lays the foundation for a stable future which can bolster the confidence of the lender while determining your worthiness to avail a loan.

· Qualification

Though it is not a yardstick to measure your Personal Loan Eligibility, having good professional qualification can certainly tilt the odds in your favour. This is because they are indicative of career progress, substantial income and consequently, a good repayment capacity.

In other words, education and qualification cannot be used as a definite or an objective criterion to evaluate your loan application. However, because they can predict your career progress, income stability, and repayment capacity fairly well, they may be utilised by banks to determine your credibility as a borrower.

The acceptance or rejection of your Personal Loan is never based on any insubstantial grounds. The borrower is always kept in the loop about the bank’s decision.

This is because giving out a loan is as important for the lender as availing it is for you. Therefore, while applying for a Personal Loan, all you need to be concerned about is having all your documents in place. Everything else will automatically fall into place.

Also Read: 10 Tips for a Successful Personal Loan Application

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