A personal loan is the go-to financing option when you are in dire need of funds or meet any of your short-term financial requirements. You can borrow funds without much hassle and at an attractive rate of interest.
However, do you know that your personal loan eligibility also depends on the city you live in? For instance, eligibility for personal loans in metros vs non-metro cities differ. Therefore, before applying for a personal loan, you should cross-check the information with the lender with the advertised interest rates and eligibility criteria.
In this blog, we will discuss the difference between personal loans in metros and non-metro cities.
Why are the personal loan eligibility criteria different for metro and non-metro cities? The answer to the question is the standard of living in both categories of cities. Confused? Let's take a closer look.
The Census population of India defines metros as cities with good infrastructure in terms of commerce, industry and transportation, and which have a dense population of more than 10-40 lakhs. Mumbai, Delhi, Kolkata and Chennai are examples of metro cities in India.
The factors that make a metro city different from a non-metro city are as follows:
All these factors result in a higher cost of living in metro cities for people compared to non-metro cities.
Due to the higher cost of living in metro cities, lenders always prefer higher income requirements from the borrower to apply for a personal loan. Also, in certain cases, higher disposable income, meaning, having enough spare cash after factoring in all the expenses to pay for the EMI.
For instance, At Fullerton India, if you are living in a non-metro city, the minimum monthly income eligibility should be Rs 20,000, whereas, if you are living in a metro city, it increases to Rs 25,000 per month.
As mostly discussed, having a high credit score improves your personal loan eligibility. But, it is not the only factor.
Income & Existing Debts
You need to meet the minimum income criteria and minimum EMI-to-income (debt-to-income) ratio to be eligible for the personal loan.
For instance, your debt-to-income ratio, meaning, the total share of EMI in your monthly income should not cross 50%. If your debt-to-income ratio is more than 50% while applying for a personal loan, there are chances that your personal loan application will be rejected, or you may get a smaller amount at a higher interest rate.
Therefore, cross-check the eligibility criteria with the lender before applying for a personal loan. You can use the personal loan eligibility calculator to understand the maximum amount you can borrow based on a few key parameters.
Use Personal Loan EMI Calculator
To further improve your personal loan eligibility, use the personal loan calculator. It will help you to choose the right repayment tenure so that you don’t strain your finances and the resulting EMI is well within your budget.
Complete Personal Loan Documentation
Documentation is key for quick approval of any loan application. The chances of a personal loan application rejection with incomplete or missing documents are very high, and this can even impact your credit score.
Providing all the documents required for a personal loan is very important for quick approval of a personal loan.
Also, by fulfilling all the eligibility criteria for a personal loan, you can negotiate better terms. For example, lower personal loan interest rates, etc.
Despite the higher minimum income eligibility for residents living in metro cities, the process to avail of a personal loan remains the same. While applying for a personal loan, always explore the options available to you. However, you should always avail of a loan from a trusted lender that matches your requirements.
The dynamics of living in a metro city are completely different from a non-metro city. It’s fast-paced and one needs to earn relatively more than a person living in a non-metro city to survive. Thanks to online personal loans, now people living in metros as well as non-metros can comfortably apply for a personal loan from the comfort of their homes.