The money you get through a personal loan always depends on your eligibility which includes your income and repayment capacity.
So, the higher the income, the higher will be the approved loan amount. However, apart from your income, your CIBIL score and credit history plays a vital role in deciding your loan amount and interest rate.
As personal loans come with no end-use restrictions, people have a vast range of requirements. From clearing the higher interest debts to medical emergencies people’s requirements vary and so thus the loan amount. Among all these, the common question which arises for most of the personal loan seekers is- how much personal loan I can get on my salary? Well, the answer is the loan amount that you can get through a personal loan always depends on your income, and this is because your income is one of the major factors which decides your repayment capacity. However, the personal loan eligibility criteria vary from lender to lender and so thus the loan amount approval on a particular salary.
Personal loans are unsecured and don’t need to be backed by any asset as security. Hence before approving any of the personal loan application lenders check for the repayment capacity of the applicant. This is done to ensure repayment and is mostly done by checking the salary slip, ITR documents and bank statement of the applicant. The loan amount also depends on all these documents.
How Much Personal Loan will be approved on your Salary?
Generally, the personal loan approval starts for a minimum salary of ₹15,000 to ₹20,000. The loan amount starts from ₹50,0000 and can go up to ₹25,00,000 depending on your borrowing and repayment capacity.
However, there is particularly no standard or any significant criteria to decide how much personal loan will be approved on your salary. The loan amount approved generally varies from lender to lender and strictly depends on the applicant’s profile.
Here are some of the factors which decide a hassle-free personal loan approval process
- Your Current Age should be in the Eligible Range: The younger you are the more is your earning capacity and hence considering this with the majority of the lenders an age group between 23 to 60 years is considered eligible for a personal loan.
- Having a Savings Account with the Bank: Having a savings account with the bank with whom you are applying for your loan can make your loan process a hassle-free one. It provides lenders with a kind of assistance where they can see all the credits and debits in your account. Moreover, a bank account with the same bank is the most essential for a pre-approved personal loan. The reason behind this is- for a pre-approved loan no documentation is required and money is credited in minutes. For this process, the information used is from the documents submitted at the time of opening the account. Hence, it is very important to have a bank account with the same lender if you want a pre-approved loan offer.
- Having a Past Credit History: A credit history is something that a lender also checks for before approving any loan. Your credit history includes all your previous and current borrowing and the repayments done against them. Lenders generally look for this to minimize their risk factors as they are never willing to lend a person who has previously defaulted for any of his loans. Having a clean past credit history always turns a personal loan application into a hassle-free process.
- Having Higher Repayment Capacity: No lender wants to take a risk for the repayment of their lent amount. Hence, to minimize this risk and to be safe a lender always looks for a borrower who has low existing EMIs. Lenders also check the Income Debt ratio for this. Generally, an applicant should have a maximum of 40% of his income as a total contribution towards all his debts.
- Stable Employment with a Registered Company: Stability in the employment or job assures the lenders that the applicant is having a permanent job and hence he/she can repay the loan easily. Employment is a registered company that also assures a timely salary and hence a timely repayment towards the loan.
- Salary more than the Required Minimum Income: If the applicant’s salary is exactly as much as the minimum required income, it provides a point for the lenders to rethink, as the applicant is already at the lower borderline and if they can find a single or small point against him like low CIBIL or income to debt ratio they will reject the loan application. Hence an applicant having more salary than the required minimum income makes a fast approval of the loan
- Proper Income Declaration and Tax Payment: A lender always looks for the salary slip of an applicant if he/she is an employed person otherwise if the applicant is a self- employed IT return forms and tax payment documents are a must which lenders look for. These documents provide a proper income declaration of an applicant and make the personal loan application a hassle-free process.
- Complete Documentation with the Loan Application: Documents are the most important thing to avail of any loan. Documents provide all the information about the applicant as his original name, address, and income. Without proper documentation, it is impossible to avail of any loan. However, personal loan documentation is minimal and online.
- Only Genuine Information in the Loan Application: Providing all the information genuinely in the loan application makes the process go easily without any obstacle as the applicant doesn’t need to verify the documents again and again if it is provided is correct in the first attempt. This reduces the time taken in the process and makes the process hassle-free.
These are some of the basic criteria which decide your loan amount approved for a personal loan. Remember any instance of a previous default can hamper your chances of getting the desired loan amount.