Personal loan eligibility

Personal loans are used to pay for various expenses as they are flexible and are taken out without needing collateral. However, because of this, they do pose a larger risk for money lenders (banks, credit institutions etc.). Lenders thus take into account multiple factors when assessing the needs and status of a borrower. These are:

  1. Your age

    You are eligible for a personal loan from between the ages of 18 to 60 years old. Beyond this age range are certain limitations when taking out a personal loan.

  2. Employment status

    Being self-employed or earning a salary as a regular income improves your chances of qualifying for a loan. Lenders are more likely to offer professionals working in private, government and multinational companies due to higher job stability and employer reputation.

  3. Work experience

    Along with your employment status, some lenders require a minimum of 2 years of total work experience and a minimum of 6 months in your current position.

  4. Minimum income

    Lenders and credit institutions differ in the amount of minimum income you require so be sure to check with multiple lenders when making a decision to take out a loan.

  5. Your credit score

    Credit card repayment and previous loans informs your credit score calculated by credit calculators. Ranging from 300 to 900, with lower scores associated with less irresponsible borrowers. Read how to improve your credit score here.

How are personal loans calculated?

The most important factor taken into consideration when checking for personal loan eligibility is if you are able to repay consistently. This is calculated through 2 methods to determine your maximum loan amount. These are both dependent on your income.


Fixed Income to Obligation Ratio (or the FOIR) method assesses the total monthly payouts that you will need to make to pay off any outstanding loans or credit card repayments. Your application may not be approved if this number is above 50% of your income.


Net Monthly Income (NMI) method functions by fixing the maximum loan amount with a multiplier on your net monthly income. If the eligible personal loan amount exceeds 30 times your NMI, your application may be rejected.


It is industry-standard to calculate personal loans through these methods, they can be found online as well. Alternatively, contact your financial advisor.


How can I improve my personal loan eligibility?

 Before you embark on applying for a personal loan, there are many factors that lenders will take into consideration to determine your eligibility.


  1. Check your credit score: Approach banks or research online how you may able to check your score. Keep track of it when you are making credit purchases or repaying loans.
  2. Do not apply for too many loans at once: Having too many loans can hurt your credit score and put more pressure on yourself on making repayments.
  3. Debt-to-income ratio: If you have existing debt, your debt-to-income ratio is all your monthly debt payments divided by your gross monthly income. This measures your ability to be able to make repayments against the money you borrow.
  4. Pay your monthly repayments on time to avoid incurring debt and damaging your future chances of personal loan eligibility.


During uncertain times we need to ensure that our finances are kept track of and that the potential to improve or assist our financial position in the future post-COVID-19 is not threatened. Unemployment may affect your personal loan eligibility, however, be sure to assess what lenders can accommodate you before applying.


Personal loans provide extra support when it is needed most and can improve your current financial status if taken out responsibly. Consider all factors of personal loan eligibility when you are able to and protect your financial future.