- The approved loan amount for a personal loan always depends on your income.
- A higher-income increases your scope of getting approved for a higher personal loan amount.
- A good credit score also helps you to get a better deal at better rates.
People have different requirements for which they apply for a personal loan. Different requirements need different loan amounts and it’s always a question for the applicant -that how much loan amount they can get through a personal loan? The answer is simple, the loan amount which 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.
Personal loans are unsecured in nature which means you don’t need to pledge any asset as security for the loan. Hence before approving your personal loan application lenders make sure you have the capacity to repay it back and thus, the loan amount which they lend to you depends on your income. This is also the reason why personal loans have a comparatively higher rate of interest compared to other secured loans.
How Much Personal Loan Will be Approved on your Salary?
There is no standard or any significant criteria to decide how much personal loan will be approved on your salary. However, 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 decides how much your personal loan will be approved for you:
- Income: As discussed above your income is the one on which your loan approval depends. The higher you earn the higher is the possibility of getting approved for a personal loan. And the higher your income is the higher loan amount you can get approved for.
- Job stability: Job stability is again something that decides whether you will be able to repay your loans in the future or not. Suppose you are earning good but there is no stability in your job, you can be jobless or you can earn less, conditions like this make you look vulnerable. And thus lends hesitate to approve a bigger loan amount to you.
- Your debt to income ratio: Your debt to income ratio indicates how much money you are left with after paying your EMIs. Lenders find it riskier to lend a higher amount loan to an individual who is having a higher debt to income ratio.
- Your CIBIL Score: Your CIBIL indicates your repayment history. All your repayments and payment history are of great use to the lenders as they decide your repayment capacity through it. The one who has a low CIBIL is always the last preferred one to the lenders, and the loan amount approved to them is low as compared to others.
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.