By ADEBAYO OBAJEMU

Though the Central Bank as a matter of policy to encourage financial inclusion and development of small and medium scale concerns has mandated commercial banks in the country to increase the tempo of personal loans to customers, it is not as easy as that.

The numbers of non-performing loans have soared in recent times, thus banks are tightening considerations that determine qualification before a personal loan can be granted. And because of the economic crunch, personal loans from banks have been of immense help in pulling so many from the brink.

Life is full of ups and downs, and in the course of living, problems often arise, and challenges also beset many people’s businesses that require financial bailouts. How do we handle such challenging situations? In such situation, we make most of what we have, but when what we have is not enough, where do we turn?
At this point in life many resort to getting loans from banks. Personal loans are loans granted to individuals for personal use, which includes rent, home renovation, emergency medical bills or holidays.

Why resorting to personal loans? Many opt for this platform because they are usually not secured by collateral. However, before a personal loan can be granted, there are many factors banks put into consideration.

Credit history:
No bank will give you loans if your credit history is bad. So, what banks do is to dig into your credit history. They are interested in knowing your relationship with other banks. If you’ve ever defaulted on a loan or have other bad records, it is unlikely for you to get a personal loan.
The natural way is to have an unblemished credit history. You should try as much as possible to be on good terms with the credit bureau. The most important thing is a satisfactory credit report.

Your status- employment-wise:
No bank will be willing to give loans to persons without viable means of income, because the first consideration will be, how will they pay back the loan? So, for a personal loan, you need to have a steady and stable source of income in a reputable organization.

The bank has to be sure that you can pay back the loan at the stipulated time. There are also other benefits associated with your employment status when you want to get a loan. For instance, at United Bank for Africa (UBA), an employee of a private firm gets a maximum of N100,000 and a minimum of N30,000,000 personal loan.

In contrast, an employee of a civil organization gets a maximum of N50,000 and a minimum of N20,000,000. Your employment status goes a long way in deciding if you would get a loan or not and how much you can receive.

Age:
Also pertinent and a determining factor in loan approval is a question of age. The general rule is; “applicants must not be less than 18 years at loan application date and not more than 55 years at the loan maturity date”.

However, many banks have their criteria and age limit when it comes to a personal loan. For instance, at Standard Chartered Bank, applicants must be between the ages of 21 – 60 before they would be considered for a loan.

Work experience:
This is also of importance to the bank as it goes a long way in determining loan approval. The number of years you’ve been working at your company will give them perspective on whether to approve or not.

An applicant who has been working for 5 years and more may be considered before an applicant who has been working for less than 5 years.

Repayment period:
Banks offer repayment periods as long as 60 months. However, in the real sense, they want you to repay in a few months. If you are thinking of exhausting the whole 60 months, think again, because it might be a wrong move. For a loan that doesn’t require collateral, it is only logical that it is repaid in a few months.

Relationship with the bank:
This is not favouritism but a rule of thumb. It is normal for people to consider those that have a good relationship with them when they have good offers. Banks consider customers that are in good standing and have been doing business with them for a long time. They would also love you more when you have a lot of money with them. Build a strong relationship with your bank if you are looking to take a personal loan in the future.

In addition to the factors discussed above, according to the Central Bank of Nigeria, to be eligible for personal loans, you must have a bank account with the bank you want to borrow from; you must be mentally fit; you must be credible; you must have good credit rating, and you must be able to repay. You can go ahead to apply for a loan if you meet these criteria.
So, next time you think of loan, think of all of the above