Searching for a personal loan, but not sure about how much personal loan on Rs. 20,000 salary can be availed? Well, a personal loan eligibility calculator can assist you with this!
In the earlier times when a prospective borrower would apply for a personal loan, all would depend upon the lending institution. After a long wait, a loan rejection letter citing non-eligibility would pop up. But the advent of technology has paved the way for financial tools like a personal loan eligibility calculator, an EMI calculator, and a credit score calculator.
These not just cut down on the long processing time but also help the borrower take a well-planned and informed decision. Thus, the question, “How much personal loan can I get on Rs. 20000 salary?” can now be answered with certainty before applying for the personal loan.
Note: Check different Lenders of Personal Loan for Low Salary
The personal loan eligibility calculator helps the applicant calculate the maximum amount of personal loans that can be availed. It is linked to his/her repayment capacity. The financial institution performs a comprehensive assessment and helps ascertain the amount through a personal loan eligibility checklist.
To ascertain the maximum eligible personal loan for Rs. 20,000 salary can have two situations:
The applicant has ongoing liabilities (FOIR (Fixed Obligation to Income Ratio) or Debt-Income Ratio)
In case the applicant has an active loan(s) and is repaying EMIs on those loans, the amount of a personal loan for Rs. 20,000 salary will be calculated using the FOIR method. FOIR, Fixed Obligation to Income Ratio, is also called the debt-income ratio.
To ascertain the maximum amount of personal loan that the applicant is eligible for, the lending company will subtract the total amount of current EMIs from the net monthly income, i.e. Rs. 20,000. Ideally, a FOIR of the applicants must be lower than 50% of the in-hand salary. The lower the FOIR, the better it is as it indicates that the applicant has sufficient funds in hand to repay additional loan obligations.
Thus, if you have a monthly salary of Rs. 20,000 and have ongoing EMIs of around Rs. 12,500, your loan application will be rejected. This is because the remaining salary will be used to fund day-to-day living, and thus the chances of default in repayment of additional EMI will be very high.
Typically, about 40% of the income after subtracting the ongoing EMI amounts is the maximum amount of personal loan an applicant is eligible for. For instance, if you have a monthly salary of Rs. 20,000 and ongoing EMIs amounting to Rs. 5,000, your eligibility for a personal loan will be up to Rs. 3,60,000 (40% of 15,000 X 60 months (or the desired loan term).
The applicant has no ongoing liabilities and is a first-time borrower (Net Monthly Income Method or the Multiplier Method)
The maximum amount of personal loan eligibility for applicants who are first-time borrowers and have no ongoing liabilities is ascertained using the Net Monthly Income Method or the Multiplier Method.
As the applicant has no other fixed monthly liability or ongoing EMIs to honour, the maximum amount of personal loan he is eligible for will be a multiple of his net monthly income (NMI). The value of the multiplier applied will range between 27 and 30 times of the NMI and depends upon factors like credit score, occupation, work experience, age, etc. Thus for a Rs. 20,000 monthly salary, the applicant will be eligible for a personal loan ranging between Rs. 5,40,000 and Rs. 6,00,000. The same has to be repaid in a maximum of 60 months.
When contemplating taking a personal loan, the first thing that comes to mind is - How much personal loan can I get on a 20000 salary? Well, it all depends upon meeting the eligibility conditions. Applicants who meet all the pre-check conditions are eligible for the maximum amount of personal loans.
The eligibility criteria to avail personal loan are:
|General Requirements||Conditions and Limits|
The applicant must be between 21- 65 years of age.
The age of the applicant helps determine the maximum loan term as the personal loan should be repaid before the applicant retires.
Almost everyone including salaried, self-employed professionals and non-professionals, student, retired officers, etc. are eligible for a personal loan.
However, every category has different personal loan eligibility criteria.
Salaried individuals are the most preferred because of their fixed income.
|Work Experience||Applicants must have been working for at least 2-5 years, of which the last year should be with the existing employer or in the same profession.|
A minimum monthly income of Rs. 15,000 is required for salaried individuals
A minimum income of Rs 20,000 is required monthly for self-employed individuals
The Higher the monthly income, the higher will be the personal loan eligibility.
|Credit Score||A minimum credit score of 600 is required for personal loan approval. A credit score which is equal to or higher than 750 can help you seek a personal loan at favourable terms and conditions.|
|Debt-Income Ratio||The Debt-Income Ratio should be less than 50%. This indicates the ratio between the total amount of ongoing liabilities and total income. It helps evaluate the repayment capacity of the applicant.|
The documents required to avail a personal loan on a Rs. 20,000 salary are
|Identity Proof||Address Proof||Income Proof|
Any one of the following
· Aadhaar Card
Any one of the following
|Name of Lending Company||Rate of Interest||Processing Fee|
|Best Bank Personal Loan Interest Rate and Charges|
|SBI Bank||08.50% p.a. onwards||1% of the loan amount is subject to minimum of Rs. 1,000 and maximum of Rs. 10,000 (GST extra)|
|IDFC First Bank||10.49% p.a. onwards||3.5% of the loan amount + GST|
|ICICI Bank||10.50% p.a. onwards||Up to 2.5% of the loan amount + GST|
|HDFC Bank||10.50% p.a. onwards||Up to 2.5% of the loan amount + GST, subject to a maximum of Rs. 25,000 for salaried individuals|
|Yes Bank||13.99% p.a. onwards||Up to 2.5% of the loan amount + GST, subject to a minimum of Rs. 999 + GST|
|Best NBFC Personal Loan Interest Rate and Charges|
|Tata Capital||10.99% p.a. onwards||2.75% of the loan amount + GST|
|Fullerton India||11.99% p.a. onwards||Between 0% and 6% of the loan amount|
|Bajaj Finance||13.00% p.a. onwards||Up to 4% of the loan amount + GST|
|India Bulls||13.99% p.a. onwards||3% of the loan amount + GST|
The process to avail of a personal loan with Rs. 20,000 salary is simple and easy. The steps involved are:
Fulfilling the lender’s eligibility conditions ensures personal loan approval on favourable terms and conditions. Listed below are a few ways that can help you improve your eligibility for a personal loan:
Case 1 - In case you have ongoing liabilities
You can avail of a personal loan of up to Rs. 3.6 lakh for a salary of Rs. 20,000 with ongoing liabilities presumed at Rs. 5000 per month. (40% of 15,000 X desired loan term (60 months).
Case 2 -No ongoing liabilities and applicant is a first-time borrower
For a Rs. 20,000 monthly salary, the eligibility for a personal loan ranges between Rs. 5.4 lakh and Rs. 6 lakh for borrowers who have no existing loan obligations. The loan eligibility corresponds to a 60 month loan period.
Best lending companies typically accept a credit score of 750 and above. They offer the lowest interest rates to such applicants. However, there are a few lending institutions that accommodate people with a lower credit score.
Eligibility conditions to avail personal loan on a Rs. 20,000 salary are:
To improve your personal loan eligibility in India, keep the following points in mind
Steps to avail personal loans with Rs. 20,000 salary are: