At What Salary Can I Apply for a Personal Loan?

A personal loan is generally seen as an emergency source of funds, as it is an unsecured loan granted by bank or other institutions for miscellaneous purposes. Considering relatively better interest rates for the lending institutions, the turnaround time for such loans tends to be short. Thus, such loans can be sanctioned and disbursed quickly.

However, one of the most frequently asked question by many of us is, “At what salary can I apply for a Personal Loan?” We will try to give you an answer for the same in this article.

What salary is eligible for Personal Loans?

While there is no standard minimum threshold, different banks and institutions may adopt internal benchmarks for processing personal loan applications. General tendency of lending institutions is to sanction the loan pro-rate basis as per the salary. So, higher the salary, higher the personal loan eligibility. However, institutions may have their internal minimum threshold for the salary amount for the borrower to be considered eligible for a personal loan. For eg. Money View Loans  requires you to have a minimum monthly in-hand income of Rs. 13,500 or more.

Let us further discuss various relevant criteria banks and lending institutions tend to consider for a personal loan:

1. Monthly Salary/Recurring Income

As discussed above, your monthly income is the primary criteria for the banks for your personal loan eligibility. A higher monthly income translates to a higher ability to repay your debts, which makes the bank comfortable about sanctioning a personal loan to you. Money View Loans looks for the following:

For salaried customers

1. Minimum monthly income required Rs. 20,000 if
   a) Applicant is new to credit or hasn’t taken a loan before
   or
   b) Applicant’s location is Mumbai/Thane or NCR region (Delhi, Noida, Gurgaon, Ghaziabad, Faridabad etc)
2. Minimum monthly income is 15,000 if Bureau score (CIBIL) is > 675 and customer is located in a metro city (other than Mumbai/NCR)
3. Minimum Monthly income required Rs. 25,000 if Credit score (CIBIL) is between 300 and 675
4. Minimum monthly income is 13,500 for everyone else

For self-employed Customers

Minimum income requirement Rs. 25,000

But salary is not the only relevant criteria, you must also receive this income/salary into a bank account.

2. Credit Score (CIBIL)

Credit score (CIBIL) is the reflection of your repayment habits, as it highlights your existing debt and their repayment history. A credit score ranges from 300 to 900, wherein a higher score reflects a better credit record. So, while you may be reaching out to a new bank/lending institution for a personal loan, they can still have a fair idea about your repayment habits through your credit score. This is due to the fact that the credit report shows records with all banks and financial institutions, and not only with the bank fetching the report.

Furthermore, considering that personal loan is an unsecured loan, banks tend to focus more on the credit score than on the salaries i.e. not on the ability to repay, but more importantly tendency to repay. Money View Loans expects a Min Cibil score of 650 or Experian score of 750 for loan eligibility.

3. Existing Debt

Your existing loan and credit card debt tend to reduce your personal loan eligibility since repayment schedule for your existing debt will eat into your monthly income and thus reduce your monthly disposable income. This in turn directly impacts your ability to service the loan.

Further, the credit mix also influences the decision of the lending institution to sanction a personal loan to you. Credit mix refers to the proportion of secured loans and unsecured loans outstanding for you. While a higher amount of outstanding loan towards building assets may not be viewed adversely by the bankers, a higher proportion of unsecured consumption loan conveys an early warning signal for the bank. As such, an individual with a higher reliance on debt may not be a preferred choice of a borrower especially for a personal loan.

4. Age of the Borrower

The age of the borrower may indicate to the lending institution the expected remaining working life of the borrower. At Money View Loans a person applying for a personal loan must  be aged between 21 years and 57 years.

Keep these important criteria in mind along with salary/income requirements when you apply for a Personal loan. MoneyView Loans provides you loans that are disbursed within a day to your bank account, provided you satisfy the basic salary and other criteria.