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How Does the Income Affect Your Personal Loan Eligibility?

How Does the Income Affect Your Personal Loan Eligibility?

Last Updated : July 3, 2020, 3:55 p.m.

Your monthly income is the important factor in loans because it decides your repayment capacity. The income requirements vary based on the lender you choose, the city you stay, etc. It is higher if you reside in cities such as Mumbai, Delhi and Bengaluru because of the expensive living.

Before applying for a Personal Loan, you must check the eligibility. In this post, you will know everything about personal loan eligibility in terms of income.

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Source of Income

To borrow a personal loan from a bank or NBFC, you must have a regular income source. And every salaried or self-employed person can apply for it. Employees of a private limited company or a Public Sector Undertaking (PSU) including the Central, State, and Local bodies employees are eligible. And your monthly income plays a vital role in your loan eligibility which can vary based on the lender you choose. Look at the table below to know the minimum income required to get a personal loan from several lenders in India.

Banks/NBFCs Monthly Income
State Bank of India (SBI) INR 15,000
HDFC Bank INR 25,000 for HDFC customers
INR 50,000 for non HDFC customers
Axis Bank INR 15,000
Kotak Mahindra Bank INR 20,000
IDFC First Bank INR 20,000
ICICI Bank INR 25,000 for Delhi or Mumbai Applicants
INR 20,000 for Chennai, Hyderabad, Bangalore, Pune & Kolkata
INR 17,500 for Others
SMFG India Credit INR 25,000 for Delhi or Mumbai Applicants
INR 20,000 for Others
RBL Bank INR 25,000 for Delhi or Mumbai Applicants
INR 20,000 for Others
IndusInd Bank INR 25,000
Standard Chartered Bank INR 50,000
Bajaj Finserv INR 25,000 - INR 35,000
Tata Capital INR 25,000

Effect of Income on your Loan Limit

The lender will set a loan limit for the customers based on your earnings. Your income tells greatly the repayment potential you will have. Using a personal loan, you can pay the debts, meet medical emergency requirements, manage wedding expenses, pursue higher studies, plan a vacation, etc.

If your income does not meet the financial needs, you can add a co-borrower which can be your spouse or any other family relative. The bank or NBFC calculates your loan eligibility based on the co-applicant’s income and credit history. If the income is high and the credit score is good, you could so easily get a higher loan amount. So, make sure your income meets the eligibility criteria of the bank to borrow the desired loan amount.

EMI & NMI Ratio

Lenders would like to see how much you are left with after the deduction of the proposed Equated Monthly Installment (EMI) from the Net Monthly Income (NMI). Usually, the lender decides the personal loan amount in a way that the total obligations including the proposed EMI are within 50% of your monthly income. However, that percentage can change based on the income slab you are in.

How to Check Personal Loan Eligibility?

It is good for you when you check the eligibility because it increases the chance of your loan being approved quickly. Your loan eligibility is calculated based on factors like income, age, repayment capacity, etc. You have seen how income affects the personal loan that is why there are personal loan eligibility calculators, using which one can find out the loan amount they are eligible for as per their monthly salary.

Just follow a few simple steps to use the eligibility calculator to know your loan amount before submitting the loan application and documents.

  • Enter your address and resident state or city.
  • Enter your age or date of birth.
  • Enter your monthly salary if you are a salaried professional.
  • Otherwise, Self-employed professionals are required to enter the annual profit after the tax payment.
  • Enter your running EMIs or credit card bills, if any
  • Name of the company for which you have been working at
  • Business stability proof with turnover and profit & loss records for the last 2-3 years

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