A personal loan on Salary is one of the easiest of the loans to avail in India, and opting for it ensures that you have the required funds when you most need it. The personal loan on Salary facility is unsecured in nature.
It means that lenders don’t require you to pledge any security and collateral for availing the loan. It is a reason why these loans come with a higher rate of interest. But, if you have a strong CIBIL Score and repayment history, then you can negotiate for a lower interest rate as well.
But, after having said that, applying for a personal loan is surely easier, but what matters is getting it approved and disbursed as it could be complex. Yes, how much personal loan can you get depends on a matrix of factors. Out of many factors, your monthly income and CIBIL Score are the most important among them.
Your Salary carries more significance over others because a lender wants to be sure that you have the required capability to pay off the EMIs on time. Hence, the risk of defaults is negated on the part of the lender.
Other reasons as to why your income is considered as a vital parameter before sanctioning of the personal loan include:
- The higher is your monthly, the higher will be your final borrowing amount – If you are drawing a higher Salary, then you can borrow close to Rs.25 lakh.
- When you are earning higher, you can easily be flexible with the chosen tenor also – you will be able to negotiate with your lender for a longer tenor leading to paying lower EMIs without disturbing other monthly expenses.
- You can negotiate for a lower and competitive rate of interest – you can ask your lender to sanction your loan at a lower rate as you can repay without risks.
How Much Personal Loan Can I Get On My Salary?If this is the question that often comes in your mind, then you should know that there is no certain income parameter to judge your loan suitability.
The lender may first check if you have missed a payment in the past and if you are repaying any loan other than the one that you are currently applying for.
Hence, the final, personal loan amount that you can borrow completely depends on your lender’s discretion. However, you should note that most banks and non-banking finance companies (NBFCs) limit the amount that you can get as a personal loan. It is mostly fixed at Rs.25 lakh to a salaried person. Lenders also review your monthly income and the potential growth that you may clock in the future before the approval. In most of the cases, you may be eligible for a personal loan amount of up to 10 to 30 times of your monthly income.
What’s more, lenders also keep the loan EMIs to about 40-60% of your Salary.
Example – if your Salary after all deductions is Rs.40,000, then chances are that your loan EMI won’t exceed Rs.20,000 – 50% of your monthly income.
With such aspects, you should also ensure to have a good Credit Score and repayment history so that you can get a higher loan limit to suit your needs the most.
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