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.
Additional Read: How can your employer affect your personal loan eligibility?
The amount of 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 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.
Additional Read: Tips to Improve Personal Loan Credit Score
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.