How Much Personal Loan Can I Get on My Salary?

There are a number of factors that determine how much loan amount one will be eligible for against their salary structure. A personal loan is among the most preferred credit options that one can obtain in times of financial crisis. Usually, personal loan amount ranges between Rs. 500 and Rs. 50 Lakhs. This type of financing is unsecured; therefore, lenders won't ask you to submit any collateral to secure the loan. This is another reason why the interest rates on these loans are substantially higher than those on secured loans.

Notably, your salary is one of the crucial factors that will determine the personal loan amount that you can borrow. Here, we are going to talk about a personal loan on salary and how much you can obtain from this unsecured credit instrument. 

How Much Personal Loan Can I Get on My Salary?

You can get personal loan based on your salary, city of residence, age and other eligibility criteria. The usual range of personal loan amounts offered by banks and NBFCs is between Rs. 500 and Rs. 50 Lakhs. However, there are various factors that will determine how much of a personal loan you qualify for. 

Your repayment capacity is assessed by banks and NBFCs primarily based on your monthly income, which is further influenced by factors such as your monthly salary, your current loan repayment obligations (including those for the proposed loan), the income of any co-applicants (if any), etc.

Methods to Calculate Personal Loan Amount

When assessing your eligibility for a personal loan, the financial institutions will typically use the multiplier technique, the fixed obligation income ratio, or a combination of these two methods. Here is a detailed discussion for each of the methods. 

• Multiplier method 

To determine a borrower's eligibility for a personal loan, banks and other financial organisations frequently employ this technique. Under this technique, lender calculate the eligibility of personal loan on the basis of a predetermined multiple of the income. The approximate range of this multiple is between 10 to 28 times of the applicant’s net monthly salary. The multiplier increases the likelihood of receiving a larger loan at a lower interest rate if you work at a reputed company with a higher salary. 

As an illustration, consider the question, "How much personal loan can I get on a Rs. 30,000 salary?" You can multiply your monthly earnings by 27 to determine the maximum sum you would be eligible for if you do not have any other EMIs. In this instance, it would be around Rs. 8 Lakhs with a 60-month repayment tenure.

The following table gives an idea about the maximum loan quantum one can be eligible for against a few monthly income figures: 

Expected Eligible Loan amount for Different Salaries

The examples given above all presume that you do not currently have any monthly responsibilities. Please be aware that these are merely examples provided for your comprehension. In order to know the actual loan amount, you must contact your lending institution and ask for the same.

• Fixed obligation income ratio

The highest amount of instalments you can make using your net income after paying for things like rent and EMIs is the basis for this method's calculation. Lenders often count between 50 and 75 percent of net revenue as instalments. Banks either extend the loan's term or lower the loan amount if your expenses are greater than this proportion.

Let's take a look at a personal loan for someone making Rs. 30,000. A personal loan of up to Rs. 5 Lakhs can often be obtained if you have monthly EMI of less than Rs. 8,000. On the other hand, if your monthly EMI is lower, say Rs. 4,000, you may be qualified for a personal loan up to Rs. 7 Lakhs or more, provided your credit score is strong and you want a loan with a 60 months repayment tenure.

Consider a few of the following options: 

Use a personal loan eligibility calculator for precise results. Please be aware, however, that the calculator displays the results based on several variables provided by the user. Your actual loan eligibility is the result of many different things. But if you meet these requirements, using the personal loan eligibility calculator can give you a decent idea of what to expect when you apply. You can also calculate the EMI for the amount you wish to take as a personal loan through online EMI calculator.

What are the Interest Rates Offered?

Personal loans are available from loan providers at competitive rates depending on your credit report, repayment history, your monthly income and other variables. In addition to the interest rates and foreclosure fees in the event the loan is prepaid, lenders also levy processing fees. The table below shows the interest rates offered by some of the most reputed financial institutions in India:

Please note that these charges are subjected to changes, and you should always discuss with the lender before applying for a loan.

What are the Eligibility Criteria for Personal Loans for Salaried Individuals?

In order to opt for a personal loan, a salaried applicant has to meet the following eligibility parameters: 

• Age limit: 21 to 68 years 

• Minimum monthly income: Rs. 10,000 or above 

• Credit score: 750+

• Maximum EMI: Up to 65% of monthly income

Please note that these eligibility criteria are only indicative and it will vary across lenders. 

What are the Documents Required While Applying for a Personal Loan?

The documents needed for a personal loan for a salaried applicant are generally minimal and hassle-free. Willing salaried applicants will have to produce the following documents: 

• Last three months’ salary slips 

• Previous six months’ bank account statements

• KYC documents, such as PAN card, Aadhaar Card, Driving Licence, etc. 

However, a lending institution might ask for additional documents if required. Submitting these documents as and when required will allow fast loan approvals. 

To sum it up, individuals opting for a personal loan on salary should keep the above-mentioned pointers in mind. Further, one must ensure to borrow personal loan on salary as much as they actually need and spend the loan amount prudently on time. It is important to keep in mind that failing to repay even a single EMI can hamper your credit score and reduce the chances of loan approvals in the long run. 

Check below table for Different personal loan amount as per your need

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