Factors That Determine Whether Your Personal Loan Application Will Get Approved or Not!

Availing of a personal loan is a quick way to receive a much-needed cash infusion. You can use them to finance home renovations, urgent medical expenses, the launch of a business, or even for a vacation. But in order to qualify for an SBI personal loan from a bank, you must go through a crucial process called client verification, which impacts whether your loan application is; whether it will be rejected or accepted. 

SBI personal loan aren’t often secured by any collateral, unlike other types of loans which is the main reason why lenders must adhere to tight eligibility requirements before accepting them. When reviewing a personal loan application, lenders consider your credit score, income, ongoing EMIs, SBI Mini statement, occupation, age, and repayment history. Let’s examine the many elements that banks take into account in more detail.

Capacity: Before anything else, the bank will assess your potential for repayment. The borrower must provide the bank with a letter authorizing them to check their credit history when applying for a loan. Banks will look at how well you’ve paid off previous loans as well as your present level of debt. After examining your income either from an SBI Mini statement or from other sources, the bank determines your debt service coverage ratio.

Loan Amount and repayment period: Banks take into account the repayment time in addition to the loan amount. Applicants that select a shorter repayment duration are typically preferred. For instance, someone who requests a loan repayment duration of two to three years will be given preference over someone who requests a longer repayment period of ten years, and so on.

Age: When analyzing a loan application, banks also take your age into account in addition to the previously listed factors. Banks favor lending to borrowers between the age of 30-50 as they are considered to be seen as reliable financially. People in this age range have been employed for a few years and yet have several years to easily pay back their loans. People over 60 may have trouble getting an SBI personal loan and may need to put up security before banks will approve their loan application.

Experience: Experience is a crucial factor that banks take into account. For instance, one with 20 years of experience will be given preference over one with only 3-4 years of experience or a less experienced candidate. When evaluating a loan application, banks favor borrowers who have been working in the same sector for several years. If a person changes jobs quite frequently, a bank can find it difficult to accept their loan.

Credit score: The credit score is the first factor a lender considers when examining an SBI personal loan application from a salaried professional. You may also be able to receive loans with lower interest rates if you have a strong credit score or one that is above 700. Your financial history and loan repayment capacity are both reflected in your credit score. The type of loans you are presently repaying or have previously successfully repaid are taken into account when calculating your score. The amount of debt you have accumulated, your history of repaying loans, how frequently you paid off credit card debt, and the number of missed EMIs are all aspects that impact your credit score.

Current Income: In addition to your current source of income and monthly expenses, banks also consider your current Income which can be checked via the SBI Mini statement or via passbook. Before issuing you another loan, bank representatives will also consider how much debt you currently have, which includes your existing home loan, auto loan, monthly payments, if any, etc. Lenders will take a look at your debt-to-income ratio, which is calculated by dividing your gross monthly income by the sum of all your monthly debt payments. Your total debt should not exceed 50% of your annual income.

Employment History: Before accepting loans, lenders want confirmation of ongoing income and for the same, they can check the SBI Mini statement. Candidates who regularly change employment or have no reliable source of income are viewed as risky borrowers. Banks consider stable employment if you have been employed continuously and have a solid job history if you have worked in the same industry. However, this does not imply that you have to have consistently worked for the same business for over the years. Self-employed people typically face more scrutiny than those who have a steady monthly salary.

Occupation: Your job role is very important to your loan application. Some professions, such as those in government banks, the public sector, may be preferred by banks. Then, persons employed by blue-chip firms as well as other dependable professions like physicians, chartered accountants, engineers, and lawyers are also preferred by banks. Self-employed or employees of private companies typically receive the lowest priority. A loan application is deemed weak if the applicant works for a company that has a track record of paying its employees’ salaries on time. A candidate who has a history of changing jobs frequently also leaves a bad impression. 

Payment history: Additionally, banks carefully examine the borrower’s credit and loan payback history. Any unpaid debts may continue for up to 7 years, which may harm both your credit score and loan eligibility. Banks may be reluctant to approve your SBI personal loan application if you have a bad history of repaying your debts or if you have overdue bills.

Amount of loan: The amount of credit that the borrower has requested is a significant consideration that banks consider. The bank will scrutinize the loan more closely and might even request collateral to reduce its risk if the loan amount is higher. However, depending on your relationship with the lender, a smaller loan application can be accepted more easily. 


Several important elements affect eligibility for SBI personal loan. For a better chance of receiving a personal loan with a reduced interest rate, keep in mind all the things listed above. In addition to this, banks take into account how long the applicant has been a customer of their business. The likelihood of your loan being accepted increases if you have maintained a positive relationship with your bank and a strong bank balance. Once you’ve obtained your loan, be sure to make your payments on time so that your bank will be willing to approve your loan application the following time you wish to do so.

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