- What is the ideal EMI/NMI ratio for a personal loan disbursal?
- Check personal loan eligibility of salaried at different banks here
Salaried individuals are often found searching for answers related to questions surrounding personal loan eligibility. While some get the right answers, many are left disappointed with unclear responses. If you belong to the latter set of people, you have come to the right place! This post will detail the quantum of loan you can get based on your salary. So, what’s the wait? Let’s begin!
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Loan Eligibility Calculation According to Salary
Banks calculate the personal loan amount by multiplying the salary with a certain mathematical figure. They can calculate using either the annual or monthly salary. However, banks ensure to maintain the maximum personal loan amount while calculating the loan. Different banks can have different norms, so you can check the table below to find out the loan eligibility of all.
Personal Loan Eligibility of Public Lenders
|Lenders||Loan Calculation According to Salary||Maximum Limit (In INR)|
|State Bank of India (SBI)||24 times of the net monthly income (NMI)||20,00,000|
|Canara Bank||Gross salary of 6 months||3,00,000|
|Punjab National Bank||Upto 15 times of the gross monthly salary||10,00,000|
|Bank of India||10 times of the net monthly salary||5,00,000-10,00,000|
|Central Bank of India||20 times of the monthly gross salary||10,00,000|
|Indian Overseas Bank||10 times of the monthly gross salary||5,00,0000|
|Indian Bank||Upto 20 times of the monthly gross salary||Not specified by the bank|
Note – These lenders will also check your expenses to determine your loan eligibility.
Personal Loan Eligibility of Private Lenders
Private lenders don’t explicitly specify the loan calculation according to the income of an applicant. But they do take cues from the personal loan eligibility calculator to decide the loan amount they can extend you. Different banks have their own eligibility calculator, hence the function can differ. As a commonality, you need to fill two things in the calculator – your monthly income and expenses. Based on what you enter against these two, you’ll get a loan estimation. The difference between income and expenses leads to savings and that determines how much space you have for loan repayment. Make sure not to spend beyond 50%-60% of your net monthly salary. You can see the maximum loan quantum for private lenders below.
|Lenders||Maximum Loan Limit|
|HDFC Bank||No maximum limit, it depends on your income, repayment capacity and credit score|
|Kotak Mahindra Bank||20,00,000|
What Else Do Lenders (Public & Private) Check to Decide the Loan Amount?
Lenders will check the following in addition to what’s discussed above to determine the loan eligibility.
Flow of Your Income – The value fetched by the personal loan eligibility calculator based on your salary and expenses is an approximate one and the final amount. The lender will see the flow of your income, whether it is coming at a regular pace or facing some irregularities, through the bank statement you provide to them at the time of applying. A regular flow of income can add to the loan amount, while irregularities can either lead to a rejection or less disbursal to your bank account.
EMI/NMI Ratio – Lenders have a certain figure on their mind by looking at your income and expenses. They use that figure to calculate the proposed Equated Monthly Installment (EMI). Afterward, they check the proportion of the proposed EMI to your net monthly income. That should not be more than 50%.
Suppose your net monthly income is INR 30,000, the maximum EMI permissible should be lesser than equal to INR 15,000. So, your expenses should remain well below INR 15,000 for the EMI of INR 15,000 to take effect. In case the expenses go past INR 15,000 and don’t create space for the payment of INR 15,000 as the EMI, the loan amount will reduce accordingly so that you can pay the reduced installment comfortably.
Workplace – Workplace is also an important consideration for lenders to make while deciding the loan amount for you. If you work in a top-notch company, chances of regular income are more compared to when you are employed at small-sized firms that struggle to post decent bottom lines. This results in greater loan disbursals in your case.
Credit Score – Lenders give high weightage to the credit score while sanctioning the loan amount for you. The credit score, which represents your creditworthiness, should be above 750 not only for the smooth approval but also for the disbursal of higher loan amounts.
Existing Relationship – If you hold an existing relationship with the lender, be it through any loan, a salary/savings account or any other deposit account, you can get a loan amount more than what is usually provided.
Running Loan EMIs – If you already have a loan running in your name, the fresh loan eligibility will take into account the existing loan EMI. And as a result, the loan eligibility will reduce.