Personal loan eligibility criteria hold significant importance to the income of an individual. This aspect is even more important than the credit score as it determines and defines the repayment capacity of the borrower. Like a home loan, a personal loan is offered to both the salaried employee and self-employed individual wherein the former has an edge over the latter as they can show regular inflow of monthly income.
Personal loan lenders are concerned about the return of their money. They offer a loan on account of the salary of the individuals. Higher salary means the lender will approve higher loan amount too. Usually, lenders offer a personal loan of up to 30 times that of the salary of the individual. This, however, is subject to the lender. To put it simply, chances of getting a personal loan with a higher loan amount are more favourable with a higher salary and vice versa.
The lenders have different salary specifications when it comes to offering a personal loan. It also significantly depends upon the geographical location of the borrower. In rural and suburban areas, the lenders offer personal loan to applicants having a salary starting from Rs. 10000 or lower to up to even Rs. 15000. Whereas, in urban areas, a salary of minimum Rs.15000 is sought. This again varies from lender to lender. A lower salary with a good credit history and no existing loan obligation also has good chances of qualifying for a loan. Whereas sometimes, a higher salary with poor credit history and existing loan obligations may result in getting the loan application rejected. Thus, it is imperative to check for all the aspects like your income and obligations before applying for a personal loan to avoid getting your loan application getting rejected.
Another important thing to keep in mind while applying for a personal loan is to check for the EMI which you will be able to pay off comfortably each month from your salary. Usually, lenders take into account a maximum of 50 per cent of your salary as the monthly instalment. This means if your salary is Rs. 15000, then the maximum EMI which you could be charged is Rs.7500. However, one can alter this by increasing the loan tenure. This again is subject to the jurisdiction of the lender.
It is thus always advisable to compare different lenders before choosing on the one. You are going to have a long relationship with the lender and thus it is crucial that there should be understanding and cordial terms for a smooth loan tenure. Some lenders are rigid with their terms and conditions while others are flexible. Comparing different lenders on account of their offerings in terms of the loan amount, loan tenure, EMI, foreclosure charges, processing fees etc ensure that you grab the best as per your needs and specifications. Visiting the digital platforms of individual personal loan lenders can be time-consuming and confusing. One can instead visit digital platforms of Fitechs like Loansjagat which offers a comparative account of different lenders based upon your KYC and financial credentials. When you enter your salary, loan amount required and others asked for details on their website, they filter various lenders which matches your profile and can offer you their loan products. You can make a choice and apply for the personal loan directly from their portal.
Salaried individuals are supposed to submit the following documents along with their personal loan application form:
- Identification Proof
- Address Proof
- Residence Ownership Proof
- Income Proof: Depending on the type of employment, the borrower can submit any of the following document.
- Payslip (Last 3 months)
- Bank Statements (3 – 6 months)
- Passbook (3 – 6 months)
- Increment or Promotion letter
- Certified letter from Employer
- Tax Paid: The borrower can submit any of the following as proof of tax paid.
- IT returns for 2 years
- Form 16
- Proof of Job Continuity: Any of the following documents can be submitted for the same.
- Current job appointment letter
- Current employment certificate
- Experience Certificate- The borrower also needs to submit a previous job certificate or appointment and relieving letter.
- Last 6 months bank statement of salary account.
- Passport sized coloured photograph.
- Investment proof (if any): shares, fixed assets, fixed deposits etc.
- Existing loans: If there is an ongoing loan, the borrower needs to submit the sanction letter and payment track record.