A personal loan is a great way to make sure you have funds in times of need. This type of financing option is unsecure in nature, which means lenders don’t ask for collateral when providing this type of loan. This is precisely the reason, why this kind of is offered at a comparatively higher rate of interest.
While applying for a personal loan is easier, getting it sanctioned is really challenging. How much amount of loan you will get depends on several factors and your monthly income and credit score being the primary factors among others. The reason why your income is considered as a pivotal factor to determine whether to sanction you a loan or not because a lender make sure that you will be able to pay EMIs on time, hence ruling out any risk of default.
There are several other reasons behind considering your monthly income a vital factor before providing you a personal loan.
- The higher your income, the better is your scope of borrowing.
- With higher monthly income, you will be able to bargain on loan tenure.
- The higher your credit score, the greater are the chances of getting a loan on lower interest rates.
One of the other important factors that most of the financial institutions consider while providing a loan is whether you have taken a loan from other lenders or not.
What Amount of Personal Loan Can I Avail on My Income?
There is no set income parameter to know whether you will get an instant personal loan or not. The lender first checks whether you have defaulted any loan in the past and if you have any present loan, beside the loan you are seeking.
There are a few things you should keep in mind when applying for a personal loan-
- Approach the lending institution directly
- Maintain your credit score above 750
How much personal loan can I get on my salary?
How much you are eligible to borrow solely depends on the lender. However, most of the financial institutions limit a personal loan at Rs. 25 lacs to an individual. Lenders examine the monthly income of online personal loan applicant and their potential growth in the salary before approving any loan. Generally, individuals are eligible for a personal loan amount up to 30 times of their in hand monthly income.
Moreover, to reduce risk of default, lenders usually keep EMIs of the loan to approximately 45-60% of your in hand monthly income. For example, if your monthly income, including of all the deductions, is approximately Rs.25, 000, probability is the loan EMI amount wouldn’t go beyond Rs.12, 500, which is approx. 50% of your monthly income.
While these are common guiding principles for financial institutions, make sure that you have an excellent credit score and credit history. Any case of previous default will hinder your probability of getting the required loan amount, or a favourable tenure and interest rate. To apply for personal loan online, you just must fill details about yourself like personal details, address details, income proof, etc.
