How Far Does Your Salary Impact Eligibility for Personal Loan?

How Far Does Your Salary Impact Eligibility for Personal Loan?

The outbreak of pandemic has rampantly changed the ways banks operate and serve customers. The transition to digital baking is faster than perceived; more and more customers are accessing internet/ mobile banking to send or receive money and contactless borrowing. Banks and NBFCs are constantly improving their infrastructure and powering up digital lending capabilities.

A customer who has a valid Aadhaar number and a valid PAN number can seamlessly assess her Personal Loan Eligibility within a few clicks. The choice is endless. From leading banks such as HDFC Bank and SBI, you can also access fast cash loans from new-age lenders like MoneyTap & MoneyView right from your smartphone.

Personal Loan on Aadhar Card Calculate Personal Loan EMI

The basic eligibility criteria for Personal Loans include age, net income, EMI/ NMI ratio, whereby the monthly income or salary is one of the important factors to assess the creditworthiness of the applicant. The collateral is not required for Personal Loans.

Here in this article, we will assess how far your salary and employer impact your Personal Loan Eligibility.

First things first, the eligibility factors for Personal Loan will demarcate the loan applications and set out a differential rate of interest and loan terms. Thus you should always compare all loan terms, such as loan tenure, processing fee, prepayment charges, loan amount, etc along the interest rate offered by the lender.

Now, how does a bank/lender determine the Personal Loan Interest Rate?

Personal Loan is a non-priority sector lending, and thus RBI allows banks to set interest rates based on risk premium attached with customer and the cost of lending. They can levy processing fees and other allied charges on their offer. However, RBI also directs lenders to transparently display the total cost of borrowing for customers in the public domain on their websites. The rate of interest is thus the benchmark lending rate plus the risk premium, plus processing charges and cost to the bank.

Herein, as we see, two factors are of utmost significance to banks,  i.e., the risk premium and cost of lending. The risk premium varies as per the customer’s profile, including her age, salary, credit mix, etc. This is why the lenders display a range of applicable interest on their website. The exact rate is quoted only when you contact the bank with a loan application.

For example, salaried employees can borrow HDFC Personal Loan within a range of 10.75% to 21.30% p.a. The difference in factors such as job stability, residential status, and FOIR (Fixed Obligation to Income Ratio) and credit score result in different rates of interest.


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The net salary of the applicant is one of the key determinants to calculate the customer risk factor.

Please note that:

Higher is the salary, the higher loan amount one can be eligible for. For the salary determines the size of EMI one can serve. This is why banks consider high net corporate clients as worthy of high ticket loans.

Thus, if you are employed with any of the reputed, blue-chip companies or multi-national companies, the chances are high that the lender will offer you a more favourable deal. The lenders believe that the employees of these companies have a more stable income and are more likely to repay loans in time.

Besides these reputed private companies, the employees of state or central government, PSUs, or quasi-government organisations are also preferred customers for the lenders.

Employment History

Apart from fixed income from a reliable employer, the lender also looks at employment history. Those who have at least two years of work history, including one year with the current employer, are considered eligible for Personal Loans. This is a standard requirement for most banks; however, the NBFC and digital-only lenders have certain relaxations on this factor as well.

Let’s compare all these eligibility criteria for Personal Loans for leading lenders like HDFC and SBI Personal Loan below:



Loan Amount Rate of Interest Processing Fee Min Salary Requirement  (per month) (in Rs.) Min work Experience


Up to 40 Lakhs

Starting from 10.75%


Up to 2.50%;
(2,999 to 25,000)

25000 for HDFC Salary Accounts;

50000 for non-HDFC Bank Salary Accounts

Min 2 years; 1 year with current employer


Up to 20 Lakhs

Starting from 9.60%


(1000 – 15000)



Up to 20 Lakhs

Starting from 11.25%

Up to 2.25%

17,500;  25,000 for metro cities

2 years;

min 1 year in current residence


Up to 10 lakh (max 15 times of Gross Salary)

Starting from 9.65 %
* lower rate for defense personnel


1.00% of the loan amount

2-3 years

Bajaj Finserv

Up to 25 Lakhs

12.99% onwards

Up to 4.13%

25000 – 36000 *
* varies across cities


Last 3 Salary Slips required

Other Factors-

Credit Score:

Higher the score, the better interest rate is offered to the customer. As a rule of thumb, you require 750 or above for the best deals. At a lower score, the rate of interest offered will be higher.

Existing EMIs:

Lower the EMI/ NMI ratio, the higher the loan amount you can get. So, if you want to avail of a low rate of interest, you must ensure that you are not servicing more EMIs than the eligible EMI/NMI ratio.

In all, the net salary in hand will be the most important criteria to assess your repayment capacity.


Also Read: How to Check Maximum Loan Eligibility for Personal Loan?


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Category: Personal Loan