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Tata Capital > Blog > Personal Use Loan > How much Personal Loan Can I Get on My Salary?

Personal Use Loan

How much Personal Loan Can I Get on My Salary?

How much Personal Loan Can I Get on My Salary?

Unlike many other financing options, a personal loan does not require you to pledge any asset as security. In other words, such loans are unsecured in nature, and that is also the reason why personal loan interest rates are higher compared to other secured loans.

If you are a salaried employee, your monthly income is one of the most critical determinants of your personal loan eligibility.

To apply for personal loan, you must fulfill the following conditions:

You need to have a minimum monthly income of Rs. 15000 (may vary from one lender to another).

You should be aged between 22 and 58 years.

You should have stable work experience of at least a year.

The Amount of Personal Loan You Can Get Based on Your Salary

“How much personal loan can I get on my salary” is the first question that comes in mind when planning to get a loan for personal usage. Although there is no mathematical formula that lenders use to arrive at the amount of loan you can be granted, there are certain guiding principles that decide the same. Banks and other lending institutions consider a couple of factors that together determine the amount you are eligible for.

As a rule of thumb, individuals are granted a personal loan for salaried employee of up to thirty times the monthly salary.

For example, if you earn a monthly salary of Rs 40,000, including all deductions, you can be granted a loan amount of Rs 12 lakh.

Subsequently, lenders prefer to keep the EMIs for their borrowers at about 45-60% of their monthly salary. Considering the example above, your EMI amount would not exceed Rs 20,000, i.e. half of your monthly income.

However, these principles are not standard operating procedures by any stretch. Make sure that you maintain a good credit score and a reliable credit history. Any history of default will adversely affect your chances of receiving the loan amount that you desire or the loan tenure that works best for you.

Expected Eligible Personal Loan Amount for Different Salaries

Monthly SalaryLoan Amount
Rs. 15,000Rs. 2.25 Lakh
Rs. 20,000Rs. 3.00 Lakh
Rs. 25,000Rs. 3.75 Lakh
Rs. 30,000Rs. 4.50 Lakh
Rs. 35,000Rs. 5.25 Lakh
Rs. 40,000Rs. 6.00 Lakh
Rs. 45,000Rs. 6.75 Lakh
Rs. 50,000Rs. 7.50 Lakh
Rs. 60,000Rs. 9.00 Lakh
Rs. 70,000Rs. 10.50 Lakh
Rs. 80,000Rs. 12.00 Lakh
Rs. 90,000Rs. 13.50 Lakh
Rs. 1,00,000Rs. 15.00 Lakh

Also, read – Overdue Payment: What It Is and How It Impacts Your Finances

Methods to Calculate Personal Loan Amount

Since personal loans are unsecured loans, loan providers have several criteria to ensure you can repay them. The factors that determine your eligibility for a personal loan based on your net income include:

Fixed Obligations to Income Ratio (FOIR):

The lender takes into account every financial obligation that you must meet every month. These are called fixed obligations and exclude statutory deductions for provident funds, investments like recurring deposit and insurance, and professional tax. Rent can also be considered as a fixed obligation depending upon the level of your income. FOIR is calculated as per the following formula:

FOIR= (Total amount of fixed obligations per month/net monthly salary) X 100

The loan provider uses FOIR to determine the disposable income that you can utilize to repay your loan.

Illustration

If your monthly income is Rs. 60,000 and your fixed obligations are 50%, then you have 50% of Rs. 60,000, i.e. Rs. 30,000 in hand to repay your loan. If you already have existing debts like a car loan or home loan, the consolidated EMI for which amounts to Rs. 20,000, lenders will then sanction a loan amount, the EMI for which does not exceed Rs. 10,000 (Rs. 30,000 – Rs. 20,000).

Multiplier Method

Under this method, the lending institution applies a multiplier on your monthly take-home pay. The value of the multiplier varies from 9 to 18 (27 in some cases). The final number depends on the profile of your employer and your salary. Here’s the formula used to calculate your personal loan eligibility using this method:

Loan Eligibility = (Your Net Salary) X (Multiplier)

Lenders apply different internal categories to various companies as per their reputation. Being employed at a high salary and stable company will increase your chances of getting a loan and lower your personal loan interest rates. 

Also, read – Benefits of Taking Personal Loans from NBFCs

Key Factors Determining Personal Loan Eligibility (Beyond Salary) 

Most common borrower queries revolve around “How much personal loan will I get for my salary” and personal loan eligibility based on salary. You can also use a personal loan calculator based on salary to check likely sanction ranges. 

Since we have now explored the significance of salary as a factor that affects personal loan eligibility, let’s explore other factors.

Lenders often look past salary when assessing personal loan eligibility factors. For instance, they also weigh credit history, employment stability and employer reputation. Your CIBIL score for personal loan and the employer type impact on loan decision are especially influential. 

Some other key factors are as follows:

  • CIBIL score for personal loan: higher than 700 improves chances.
  • Employer type impact on loan: government, MNCs and listed firms are favoured.
  • Employment history & stability: longer tenure reduces perceived risk.
  • Existing liabilities & DTI: debt-to-income ratio limits sanctionable amount.
  • Age, residency & repayment track record: clean history boosts approval odds.

Also, read – What is a Personal Loan?

Tips to Increase Your Personal Loan Eligibility Based on Salary 

If you’re wondering “How to increase personal loan eligibility” we’re here to help you with tips for higher loan amount securing and help you to generally improve salary-based loan eligibility. You can adopt some simple steps to help raise the amount lenders are willing to offer you, ultimately improving personal loan amount based on salary. 

These are some helpful tips:

  • Boost credit score: clear smaller debts and avoid late payments.
  • Reduce existing EMIs: lower debt burden to increase eligible loan.
  • Add a co-applicant or guarantor: strengthens application for a higher loan amount.
  • Provide proof of stable salary: submit latest payslips and bank statements.

Also, read – How to Get a Personal Loan on PAN Card

Documents Required for Personal Loan Application (Salaried) 

Having correct documents for personal loan salaried applicants is extremely crucial. A clear set of personal loan application documents demonstrates your eligibility and helps with speedy personal loan approval. 

Tata Capital requires the following documents:

  • Identity proof: passport, PAN card or driving licence.
  • Address proof: utility bill, Aadhaar or bank statement.
  • Income proof: last 3 to 6 months’ payslips and Form 16.
  • Bank statements: salary credit evidence for 3 to 6 months.
  • Employment proof: employee ID, appointment letter or HR certificate (shows employer type impact on loan).
  • Optional: co-applicant documents and recent passport photos. 

If you’re wondering “How to calculate personal loan amount based on salary”, you can use Tata Capital’s tool personal loan calculator based on salary after assembling these personal loan application documents to estimate “How much personal loan will I get for my salary.”

Final Words

The way you plan important life events like higher education or marriage define who you are. Don’t let deficiency of funds stop you from turning your dreams into reality. Keeping your needs and desires in mind, Tata Capital helps you at every step of your financial planning and customizes solutions tailored to your need.

Tata Capital has also designed a personal loan EMI calculator that helps you calculate the EMI you need to pay towards the principal amount and interest over the loan tenure. You can use this EMI calculator to ascertain the amount you can repay each month conveniently over a specified period. Let Tata Capital be your trusted companion and guide to help you in your times of need.

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FAQs

How much personal loan can I get if my salary is ₹30,000 per month?

Since personal loan amount based on salary varies, the final amount will depend on your lender’s policies and your profile. At Tata Capital, you can get access to funds up to Rs. 35 lacs.

Do my existing EMIs affect the personal loan amount I can get on my salary?

 

Yes, existing EMIs significantly influence the amount sanctioned. Lenders consider your debt-to-income ratio and typically prefer EMIs not exceeding 40 to 50% of take-home salary. Higher liabilities reduce eligibility and lower maximum loan availability.

Can I get a personal loan even if my salary is low?

 

Yes, borrowers with lower salaries can still obtain personal loans if they maintain a strong credit score, stable employment, and minimal outstanding debt. Adding a co-applicant or choosing a longer tenure may also improve approval chances and increase the eligible loan amount.

How can I calculate my eligible personal loan amount based on my salary?

 

You can use a personal loan calculator based on salary, which estimates the amount based on salary, credit score, and existing obligations. Lenders generally allow total EMIs up to 40 to 50% of monthly take-home pay, helping determine how much you can borrow comfortably.

What is the highest personal loan amount I can get on my salary?

 

If you apply for a personal loan with Tata Capital, you can potentially borrow up to Rs. 35 lakh depending on your eligibility and financial profile. You should check with the lender and assess your eligibility to get an approximation of the loan amount you might qualify for based on your salary and existing liabilities.

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