How Much Salary Do You Need to Qualify for a Personal Loan? Find Out
October 29, 2019
Unplanned emergency expenses can occur at any time. Instead, of withdrawing your investments prematurely (with penalties) or taking informal loans, a Personal Loan is a great option to help you meet your immediate financial needs. Find out what’s the minimum eligibility for it and factors that impact your loan eligibility.
Having a little extra credit is a huge boon for all. Whether you are planning a much-needed vacation with your family, planning to gift the latest smartphone your loved one has been asking for, organising your dream wedding or dealing with medical emergencies – a Personal Loan offers double benefits.
It provides instant access to funds, with zero collateral. Personal Loans have become the most preferred loan product for dealing with cash needs that are difficult to manage with your monthly pay cheque.
A Personal Loan gives you the freedom to use the loan amount in any way you want, helping you meet all your financial obligations.
Who is Eligible for a Personal Loan?
Since a Personal Loan is an unsecured loan (there is no need for collateral), personal loan eligibility criteria are different from other secured loans like Home Loans. While the actual criteria vary from individual to individual, and the relationship you maintain with your bank, here are the general requirements and limits:
- Minimum Age – 23 years
- Maximum Age – 58 years for salaried and 65 years for self-employed
- Employment Status – Employed or in business, for at least two years
- Minimum Salary – Usually, decided on a case-by-case basis considering several factors like credit score of the individual, relationship with the bank, etc.
Since Personal Loans do not require collateral, the lender considers your take-home pay to evaluate your eligibility.
What is the Minimum Salary for Personal Loans?
There’s no one pre-defined minimum salary required for Personal Loans. It’s determined on a case-by-case basis, considering several factors. When you apply for a Personal Loan on salary, the loan officer considers several factors in determining if your salary makes the cut-off for eligibility. Some of the deciding factors include:
The place where you stay plays a crucial role in determining the minimum salary. Generally, the minimum salary requirement is higher in metros like – Delhi, Mumbai, Chennai, Bengaluru, Hyderabad, and others, compared to the minimum salary requirement in Tier – II cities and towns. This is because the cost of living in cities is higher than towns, so the lender expects that you have a bigger pay package to be able to pay off the loan comfortably.
Whether you reside in your own house or rented place plays a crucial factor in determining your minimum salary requirement. This is because, when you stay at a rented property, your disposable income reduces, which in turn, reduces your repayment capacity.
If you already have other credits like home loans, Car Loans, or Credit Card debts, then your minimum salary requirements will increase.
Your credit history plays a critical role in determining your loan eligibility. If you have a stellar credit history, then it proves your repayment capacity, which relaxes your eligibility requirements. On the other hand, if your credit history is poor or bad, then it may even lead to your loan application being rejected.
Your Employment Track Record
Working for a reputed company for several years indicates that you are in a stable job. When you have a stable job, the lender is likely to lower the minimum salary requirements. Now, answering the question, “How much Personal Loan can I get on my salary?” Make use of an online Personal Loan eligibility calculator to determine the actual amount for your specific case. You have to provide a few details like – your age, location, current salary, years of employment, etc. and the calculator provides you with the maximum Personal Loan amount that you can avail on your salary.
Knowing your eligibility before you approach a lender puts you in a favourable position to negotiate the loan terms and conditions better with the loan officer.
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