A personal loan makes sure you have the funds when you need it. It is one of the easiest loans to avail. This financing option is unsecured in nature, that means most lenders wouldn’t require you to pledge any asset or collateral as security for the loan. A personal loan is also why such loans carry a comparatively higher rate of interest than secured loans.
Thus, while applying for a personal loan is certainly easier, getting it approved and sanctioned can be challenging. How much of the amount that will be ultimately approved will depend on a mix of factors – with your monthly income and credit score are probably the most important among them. Your income is given priority over the other factors because a lender would want to be sure with your capability to pay back the EMIs on time, thus ruling out any risk of default.
There are other grounds behind considering your monthly income a vital standard, prior to extending you a personal loan. Some of them are:
- More will be your scope of borrowing when your income is high.
- You will then be flexible with the chosen loan tenor as well
- More the chance of getting lower interest rates on a personal loan, when the CIBIL score is high.
Lending institutions often consider signing the dotted line in the loan approval document whether you have availed loans from other lenders or banks. This is another prominent factor.
How Much Salary Do You Need to Qualify for a Personal Loan?
Again, there isn’t really a standard income parameter to judge your suitability for a loan. The lender is likely to first check whether you have defaulted in the past and if you are currently servicing any loan, besides the one you are applying for.
There are a few things you should keep in mind:
- Approach the lending institution directly
- Keep your credit score above 700
How much you are eligible to borrow depends on the lender’s preferences and choice. However, most banks and NBFCs limit a personal loan at Rs. 25 lakh to an individual. Lenders evaluate the monthly income of loan applicants and the potential growth in it before approving a loan. Individuals are eligible for a personal loan amount of up to 30 times of their monthly income, in most of the cases.
Personal Loan Eligibility Criteria for Self-Employed Applicant
|Eligible Age Group||25 years to 65 years|
|Minimum Annual Turnover||Rs. 15 lakh|
|Minimum Profit After Tax (Previous FY)||Rs. 2 lakh|
|Minimum Business Experience||3 years in current business|
|Minimum Prior Relationship with lender||1 year|