Personal Loan Eligibility

Every individual at some point in life faces a financial crunch where they will need more funds to fulfill the requirements. It can be for any need like travelling, renovation, marriage expenses, medical emergency, education, vehicle, consumer durable goods and so on. It is for this reason that banks provide Personal Loans. In case you are planning to Apply for a Personal Loan, you must fulfill the eligibility criteria set by the lender. If you meet the lender's requirements, your loan will be approved easily.

Personal Loan Eligibility Criteria of Different Banks in India

ProviderMaximum Loan Amount & TenureMinimum Work Experience
HDFC Bank 40 Lakhs for 60 Months2 years
SBI20 Lakhs for 60 Months1 year
ICICI Bank 25 Lakhs for 72 Months2 years
Citibank30 Lakhs for 60 Months1 year
Axis Bank15 Lakhs for 60 Months1 year
Bajaj Finserv25 Lakhs for 60 Months1 year
IndusInd Bank15 Lakhs for 60 Months2 years
Bank of Baroda10 Lakhs for 60 Months1 year
Yes Bank40 Lakhs for 60 Months2 years
PNB15 Lakhs for 84 Months2 years
IDFC FIRST Bank25 Lakhs for 60 Months2 years
Standard Chartered Bank50 Lakhs for 60 Months1 year
Tata Capital25 Lakhs for 72 Months1 year
Indian Overseas Bank5 Lakhs for 60 Months1 year
Federal Bank25 Lakhs for 48 Months3 years
Fullerton India25 Lakhs for 60 Months1 year
Kotak Mahindra Bank20 Lakhs for 60 Months1 year
RBL Bank20 Lakhs for 60 Months3 years
IIFL Finance25 Lakhs for 36 Months2 years
IDBI Bank5 Lakhs for 60 Months1 year
Canara Bank3 Lakhs for 60 Months3 years
HDB Financial20 Lakhs for 60 Months1 year

Personal Loan Eligibility

You may be eligible for Personal Loan from one or more banks in India if you meet the following eligibility conditions:

  • Age: Minimum 21 years and maximum 65 years.
  • Loan Amount: Minimum 1 Lakh and maximum up to 50 Lakhs. However, for most banks  25 Lakhs is the upper limit on a Personal Loan. You may also come across banks that only offer a maximum Personal Loan amount that is 10-22 times that of your net monthly income.
  • CIBIL Score: For most banks a high CIBIL Score is a must for lending a Personal Loan; usually, the ideal being a score of 700 or more.
  • Net Monthly Income: A regular salary and flow of income is a must to get a Personal Loan easily. Most banks prefer at least 25,000 net monthly income of borrowers.
  • Work Experience: Banks usually prefer a work experience with the current employer to be at least 1-3 years.
  • Ongoing EMIs: Any ongoing equated monthly instalment (EMI) is a liability and a negative impact on your Personal Loan eligibility. It is always better to clear off existing loans before applying for another one.

→ Personal Loan Eligibility for Salaried

  • Minimum age - 21 years at loan application
  • Maximum age - 60 years at loan maturity
  • Minimum Monthly income - 20,000
  • Minimum work experience - 2 years continuous job
  • ITR - Last 2 years ITR
  • Credit score - 700 & above

→ Personal Loan Eligibility for Self-employed

  • Minimum age - 25 years at loan application
  • Maximum age - 65 years at loan maturity
  • Minimum profit after tax - 2 Lakhs as per audited financials
  • Minimum turnover - 40 Lakhs for non-professionals and 15 Lakhs for professionals, as per audited financials
  • Minimum business stability experience - 3 years (in a profitable condition)
  • ITR - Last 2 years ITR
  • Credit score - 700 & above

Methods of Calculating Personal Loan Eligibility

There are two ways of calculating the Personal Loan eligibility:

  • Multiplier Method: Under this method, the banks apply a multiplier to your net take home salary in order to calculate your Personal Loan amount eligibility. Higher the salary and reputed the company, higher is the multiplier and the loan eligibility.
  • FOIR (Fixed Obligations to Income Ratio): Under this process, the Personal Loan amount eligibility is computed on the basis of maximum EMIs or monthly instalments you can pay with regard to the net income after accounting for all other fixed expenses like rent and EMIs. The FOIR percentage can vary from lender to lender and for high-income borrowers, this can be upto 65%.

Factors Affecting Personal Loan Eligibility

The eligibility criteria for availing Personal Loans vary from bank to bank. There are a few common guidelines which the majority of the lenders follow when it comes to approving a Personal Loan.

The basic variables that determine an individuals' eligibility for applying a Personal Loan are:

  • Age Criteria: The main guideline followed by most banks and other financial institutions is that for availing a Personal Loan, a salaried individual must be between the age group of 21 years to 60 years while for a self-employed person it has to be within 25 years to 65 years of age.
  • Credit Rating: The credit history of an applicant is an important aspect that lenders look into while approving Personal Loans. Delays and defaults in paying monthly EMIs of other loans or credit card dues are considered which can lower the eligibility for Personal Loans from banks and other financial institutions. 
  • Employment Stability: The employment stability of the person who takes loan also forms a crucial eligibility criterion. According to the banks and other financial institutions, a salaried person with a minimum of 2 years of service with 1 year in the current profession and a self-employed person with a minimum of 5 years of total earning tenure with at least 2 years in the current profession is eligible for taking a Personal Loan.
  • Employer: As a Personal Loan is an unsecured loan, thus the kind of employer the applicant is working with is given due credit while taking a decision on the eligibility criteria for Personal Loans. The employees in the public sector who are working with established private companies are better eligible for availing Personal Loans as compared to others as there is stability in their income.
  • Financial Situation: The financial condition determines the loan repayment capacity of an individual who has taken a loan and hence the lenders give maximum importance to this aspect while giving an unsecured Personal Loan to any individual.

How to Improve your Eligibility for a Personal Loan?

  • Apply jointly with an earning co-applicant to enhance your loan amount eligibility.
  • Clear your existing loan dues, if you have any.
  • Check your credit report and credit score, and check if there are any problem areas.
  • Opt for a loan amount that you can service comfortably.
  • Opt for longer repayment tenure and shorter EMIs.
  • Improve your credit score. It should be minimum 700 or above.

Documents Required for a Personal Loan

The documents to be submitted while applying for Personal Loans are as below:

  • Duly completed loan application form
  • Recent passport size photographs
  • Bank account statements or passbook for the last six months
  • Proof of residence (photocopy of recent telephone bills or electricity bill)
  • Proof of identify (photocopies of Voters ID Card/ Aadhaar Card/ Passport/ Driving License/ PAN Card).
  • IT returns details for the three years for self-employed professionals
  • Form 16 or IT returns for the last two financial years for salaried employees

More about Personal Loan Document Required

Kotak Personal Loan Festival Offer 

Ahead of festival season, Kotak Mahindra Bank has announced Rs 999 flat processing fee offer on Personal Loans. Customers can avail of instant approvals on personal loan applications up to Rs. 20 Lakhs at lowest interest rate starting at 10.25% p.a for maximum of 5 years. 

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Personal Loan Eligibility FAQs

✅ What is the Personal Loan eligibility for salaried employees?

Loan eligibility for salaried employees depends on various factors like:

  • Age: minimum is 21 years and maximum is 65 years (it might vary from bank to bank)
  • Salary: minimum 20,000 per month
  • Total working experience: Minimum 2 years of professional experience

✅ How can I check personal loan eligibility?

Nowadays many lenders have a free online Personal Loan Eligibility Calculator on their website, using which you can check your eligibility. You can also check the eligibility criteria of different banks on MyMoneyMantra before applying for a loan.

✅ What should be the minimum and maximum age group to get a Personal Loan?

The minimum age limit for a person to apply for a Personal Loan should be 21 years. Maximum age can be up to 60 years (for salaried employees) and 65 years (for self-employed) at the time of loan maturity.

✅ How does my income determine my eligibility?

The person's monthly income to get a Personal Loan should be at least 20,000. A few banks give loans to individuals with a salary less than that of 25,000. Banks follow a different limit to calculate the ratio of your fixed obligations to your monthly income. For instance, if your monthly income is 30,000, then the bank calculates your eligibility such that fixed obligations do not exceed more than 50% of your income.

And in case, your income is more than 40,000 per month, then banks will allow higher fixed obligations to income ratio of around 65%, which means that your fixed expenses can be up to 65% of your income to be eligible for a Personal Loan from a bank. Higher the income, better are the chances to get a high Personal Loan amount.

✅ Does the company profile affect my eligibility for availing a Personal Loan?

Yes, the company profile affects your Personal Loan eligibility. A good company profile along with a high salary increases your eligibility to get a Personal Loan at low interest rate. There are a few banks that offer loans to non-categorized company employees but at a higher interest rate.

✅ Do my existing loan obligations affect the Personal Loan eligibility?

In case you are already paying a monthly EMI for any existing loan then your eligibility for the new loan that you have applied will be comparatively low.

✅ How can I increase my eligibility for a Personal Loan?

You can improve the eligibility for a Personal Loan by following the below steps: 

  • In order to increase your eligibility, pay off your running debts completely.
  • Pay your EMIs or other obligations timely so that you improve credit history

Transfer your existing loans to a lower rate of interest in order to reduce your existing EMI and also to get a new loan of a higher amount.