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Tata Capital > Blog > Personal Use Loan > Personal loan limits in India: What’s the maximum you can borrow?

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Personal loan limits in India: What’s the maximum you can borrow?

Personal loan limits in India: What’s the maximum you can borrow?

Are you thinking about taking a personal loan? Do you know how much you can borrow? Many borrowers believe that the maximum loan a lender can give is fixed. However, the truth is that the limit depends on your income, credit score, and existing loans. Lenders look at your repayment capacity before deciding how much you can borrow.

In this article, you’ll learn about the factors that set your maximum personal loan limit, what banks usually offer, and how you can improve your chances of getting a higher approved amount.

Key factors that decide your personal loan amount

Lenders determine your personal loan amount based on your ability to repay and your overall financial health. They check your income, debts, and credit history to understand risk. A higher, stable profile usually means a higher approved amount. On the other hand, weaker finances may reduce the limit.

The key factors determining your personal loan amount include:

  • Credit score and history show your creditworthiness and how well you repay loans.
  • Monthly income and job stability affect how much you can borrow.
  • Existing debts reduce the amount lenders can safely offer.
  • Employment type and age influence repayment tenure.

Monthly income

Monthly income is one of the main factors lenders check when deciding on your personal loan amount. A higher and stable income shows you can repay EMIs on time without stress. It also means you have enough money left after expenses to handle a bigger loan. People with steady salaries or business earnings are seen as lower risk. Lenders feel confident in approving higher loans and better terms for such applicants.

Existing liabilities

Existing liabilities refer to the loans and EMIs you are already paying. These include credit cards, car loans, or home loans. Lenders check your Fixed Obligation to Income Ratio (FOIR) or Debt-to-Income (DTI) ratio to determine how much of your income goes toward debt. If you’re already paying large monthly installments, it can be difficult for you to get a loan. Lower existing debts mean you can manage another EMI easily. This makes lenders approve a higher loan amount.

Age and employment stability

Age and employment stability help lenders judge your repayment capacity. Younger borrowers with many working years left can get longer loan tenures. Sometimes they can also get a higher maximum personal loan limit. However, eligibility is lower for applicants about to retire. As a result, lenders may offer them a shorter tenure. A stable job or steady business income shows regular earnings, making you a reliable borrower. Moreover, when your work history is consistent, you become a low-risk borrower. You are considered to be making timely repayments and can thus get better loan terms.

Credit score and repayment history

Your credit report shows how responsibly you have handled loans and credit cards. A high credit score means you usually pay EMIs and bills on time. Lenders begin to trust you. You are a low-risk borrower if you have a good past behavior. Lenders may approve a higher loan amount and better terms. However, your loan limit may be reduced if you have a low score, make late payments, or default. Your application may even be rejected.

Eligibility criteria for personal loans in India

In India, personal loan eligibility is based on a few common checks that most lenders follow. If you meet these basic norms, your chances of approval increase, and you can get a higher loan amount.

  • Age: Generally, the age limit is 21 to 60 years for salaried individuals and up to 65 for the self-employed, ensuring sufficient working years for repayment.
  • Income level: If you have a monthly income of around Rs. 25,000, it shows that you will be able to repay EMIs.
  • Employment type: Salaried jobs or stable businesses are preferred for reliability.
  • Work experience: If you have a longer job or business history, lenders consider you a favorable borrower.
  • Credit score: A good score, usually above 700, and a clean repayment record increase approval chances and loan limits.

Documents required to apply for a personal loan

When you apply for a personal loan, lenders ask for basic documents to verify your identity, income, and ability to repay.

  • KYC documents: A copy of your Aadhaar Card, PAN Card, passport, or Voter’s ID
  • Proof of income: Salary slips, Form 16, or business income records
  • Bank statements: Usually from the past 3 to 6 months
  • Employment details: Offer letter, ID card, or business proof
  • Two recent photographs

If you keep these documents ready and provide clear copies, the loan approval and disbursal process can be smoother and faster.

Methods used by banks to calculate the maximum loan amount

Banks use simple formulas to decide the maximum personal loan limit for salaried and self-employed individuals. These methods help them check if you can repay the loan comfortably.

  • Fixed Obligation to Income Ratio (FOIR): Banks see how much of your income goes to existing EMIs. Lower obligations mean higher eligibility.
  • Income multiplier method: Some lenders offer a loan equal to a multiple of your monthly income, like 10 to 20 times your salary.
  • EMI-to-income ratio: Lenders keep your EMIs within the limit that’s comfortable for you.
  • Net monthly surplus: Lenders estimate how much money you have after expenses.

These checks help lenders set a safe maximum personal loan limit.

Tips to increase your personal loan eligibility

Improving your borrower profile can help you get a higher personal loan amount and faster approval. Here are some simple tips to boost eligibility:

  • Maintain a good credit score: Pay EMIs and credit card bills on time.
  • Reduce existing debts: Repay small loans to see an improvement in your FOIR or DTI ratio.
  • Show stable income: Stay longer in one job or maintain steady business earnings.
  • Add a co-applicant: A second income can increase the approved amount.
  • Keep documents ready: Verification and approval are faster with clear and accurate documents.
  • Choose the right lender: Compare banks and NBFCs for better limits and terms.

Best practices to follow before taking a personal loan

The maximum amount of a personal loan in India varies from lender to lender. However, you must not take a personal loan based on the lender’s maximum limit. You must make informed decisions so that you can repay the amount comfortably. The following best practices can help:

  • Check your real need before borrowing and avoid taking a loan for non-essential expenses.
  • Compare interest rates, fees, and terms from different lenders to find the best option.
  • Calculate your monthly budget and make sure the EMI fits comfortably within your income.
  • Review your credit score and clear any overdue payments before applying.
  • Borrow only the amount you truly need to avoid high repayment stress.
  • Read the loan agreement carefully and understand charges, penalties, and tenure.
  • Keep an emergency fund so you can manage EMIs during unexpected financial situations.

Borrow within your repayment capacity

You must always borrow an amount you can comfortably repay each month. Check your income, regular expenses, and existing EMIs before deciding on the loan amount. Your EMI should not disturb daily needs like rent, food, and savings. Taking a loan you can’t afford to repay may lead to stress and missed payments.

Also, make sure you choose a loan amount and tenure that fit your budget. Realistic borrowing helps you repay on time and maintain a healthy financial life.

Compare lenders and interest rates

Before applying for a personal loan, take time to compare different lenders. Check interest rates, processing fees, and repayment terms carefully. Even a small difference in interest can change your total repayment significantly. Look at EMI options and pre-payment charges as well. Review the customer support to ensure that you will get services when required.

Comparing offers helps you find a loan that suits your budget and needs. Do not accept the first offer you see. Smart comparison can save money and make repayment easier.

Personal loan EMI calculator

A personal loan EMI calculator is a simple online tool that helps you plan your loan better. You enter the loan amount, interest rate, and tenure, and it shows your monthly EMI instantly. This helps you understand how much you need to pay every month before applying. You can also change the amount or tenure to see what fits your budget. Using an EMI calculator helps you avoid taking a loan that is difficult to repay. It allows you to choose a comfortable repayment plan and manage your monthly expenses easily.

Step-by-step process to apply for a personal loan online

The steps you need to follow to apply for a personal loan online are:

  1. Visit the lender’s website or app and choose the personal loan option.
  2. Fill in the online application form with basic details such as name, income, and job.
  3. Upload required documents, including KYC, income proof, and bank statements.
  4. Submit the application form.
  5. If the lender requires more details, they will ask for them.
  6. You will receive the loan offer after approval.
  7. Read the interest rate and loan terms.
  8. Accept the terms digitally and complete e-sign or OTP verification.
  9. After final approval, the loan amount is disbursed directly to your bank account.

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FAQs

What is the maximum limit of a personal loan in India?

The maximum personal loan limit in India usually ranges from Rs. 5 lakh to Rs. 50 lakh, depending on the lender. Your income, credit score, job stability, and existing debts decide the final approved amount. Higher income and strong credit history can increase your loan limit.

How much personal loan can I get on a 70,000 salary?

With a Rs. 70,000 monthly salary, you may get a personal loan of around Rs. 7 to Rs. 15 lakh. The exact amount depends on your credit score. Existing EMIs, job stability, and lender rules also affect the loan amount. Lower debt and a strong credit history can help you get a higher loan.

How much salary is required for a 20 lakh personal loan?

To get a Rs. 20 lakh personal loan, lenders usually expect a monthly salary of Rs. 80,000 to Rs. 1.2 lakh or more. A good credit score, low existing EMIs, and stable employment also matter. Higher income and strong repayment history improve approval chances for larger loans.

Who is eligible for a 25 lakh personal loan?

People with high and stable income, good credit score (usually 750+), and low existing debts may qualify for a Rs. 25 lakh personal loan. Salaried professionals or successful self-employed individuals with strong repayment history and steady work experience have better chances of approval.

Can I borrow more than one personal loan at the same time?

Yes, you can take more than one personal loan if your income supports multiple EMIs. Lenders check your FOIR or DTI ratio to ensure you are capable of repaying all debts. A strong credit score and low existing liabilities improve your chances of approval.
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