Personal Loan Eligibility

Personal Loan Eligibility Criteria for Salaried & Self-employed Applicants

Particulars	For Salaried	For Self-employed
Age Limit	18 – 60 years	21 – 65 years
Minimum Income (may vary across lenders)	Rs. 15,000 per month	Rs. 15 lakh p.a.
Minimum Work Exp./ Business Continuity	Usually 1 year with some lenders requiring longer work experience.	Usually 3 years of business continuity with some lenders requiring longer period of business continuity
Credit Score	Preferably 750 and above

Personal Loan Eligibility Criteria of Top Banks & NBFCs

Lenders	Eligible Loan Amount	Minimum Eligible Income	Eligible Age
Axis Bank	Rs 50,000 – Rs 40 Lakh	Rs. 15,000 per month	21-60 years
Bajaj Finance	Up to Rs 55 Lakh	Rs. 25,001 per month	21-80 years
SMFG India Credit Company Limited (formerly known as Fullerton India Credit Company Limited)	Up to Rs 30 Lakh	Rs. 20,000 per month	–
HDFC Bank	Up to Rs 40 Lakh	Rs. 25,000 per month	21-60 years
ICICI Bank	Up to Rs 50 Lakh	Rs. 30,000 per month	23-65 years
IDFC First Bank	Up to Rs 1 Crore	On a case by case basis	23-60 years
IndusInd Bank	Rs 30,000 – Rs 50 Lakh	Rs. 25,000 per month	21-65 years
Kotak Mahindra Bank	Up to Rs 40 Lakh	Rs. 25,000 per month	21-60 years
Money View	Rs 5,000 – Rs 5 Lakh	Rs. 13,500 per month	21-57 years
PaySense	Rs 5,000 to Rs 5 Lakh	Rs. 18,000 per month	21-60 years
Punjab National Bank	Up to Rs 20 Lakh	–	Above 18 years
Standard Chartered Bank	Rs 1 Lakh – Rs 50 Lakh	Rs. 22,000 per month	22-58 years
State Bank of India	Up to Rs. 20 Lakh	Rs. 15,000 per month	21-76 years
Tata Capital	Up to Rs. 75 Lakh	Rs. 15,000 per month	16-65 years
YES Bank	Rs 1 Lakh – Rs 40 Lakh	On a case by case basis	–

Note: Data as of 6 December 2023

Also Read: Which banks & NBFCs offer personal loans at low interest rates?

Factors Affecting Personal Loan Eligibility

• Credit score: Applicants with credit scores of 750 and above are considered to be more financially disciplined and hence, are less likely to default. Hence, banks and NBFCs prefer to lend personal loans to such applicants. Many lenders also set lower interest rates for personal loan applicants having higher credit scores. However, some lenders also offer personal loans to applicants having lower credit scores but at higher interest rates. Therefore, applicants should check their credit scores at regular intervals and take necessary steps to keep it as close to 900 as possible.

Prospective personal loan borrowers having no or low credit scores can improve their credit scores by availing lifetime free Step UP Credit Card, which is a secured credit card issued by SBM Bank (India) Ltd. with Paisabazaar as co-branded partner. To know how Step UP Credit Card can help in building or improving credit score, click here.

Note that the minimum credit score required for availing a personal loan may vary from one lender to another. Some lenders also offer personal loans to those who are new to credit i.e. applicants having no credit score.

• Employment Type and Employer Reputation: Among salaried and self-employed applicants, lenders offer personal loans to salaried applicants at lower interest rates due to their higher income certainty. Among the salaried applicants, government employees are the most preferred followed by the reputed corporates and MNCs. In case of personal loans offered to self-employed applicants, professionals like CAs, doctors, architects, etc. are more likely to get loan at lower interest rates.
• Age: Most banks and NBFCs offer personal loans to applicants in the age group of 18 years to 65 years. Various public sector banks also offer personal loans to pensioners on the basis of their pension income.
• Minimum Income: Higher income indicates higher capacity to repay your loan on time, which further implies lower risk for lenders. For salaried professionals, the minimum salary requirement set by most lenders is Rs. 15,000 or above. Note that individuals with a minimum salary of Rs 25,000 are preferred by lenders. In case of self-employed individuals, lenders usually require gross annual income of Rs. 2 lakh or more. Note that some lenders have not publicly disclosed the minimum salary or monthly income (in case of self-employed professionals/non-professionals) requirements for their personal loan applicants.
• Work/Business Experience: Many lenders specify that salaried individuals need to have a minimum total work experience of 1 year, with others requiring longer work experience to be eligible for availing personal loans. Some lenders may also require their personal loan applicants to have worked for a pre-determined period in their current organisations to be eligible for the loan. In the case of self-employed individuals and professionals, they usually need to have been in the current business for a minimum of 3 years in order to be eligible for an unsecured personal loan.
• Repayment Capacity: Banks and NBFCs usually sanction personal loans to applicants whose EMI/NMI ratio is not more than 50% to 55%, which may vary across lenders. This implies that their total credit card and existing loan EMI obligations, including that of the proposed loan, should not exceed 50% of their total income.

Before applying for a personal loan, use Paisabazaar Personal loan EMI calculator to find your optimum EMIs based on your repayment capacity while ensuring your total EMI obligations, including that of the proposed loan, does not exceed 50% of your monthly income.

Tips to Improve Personal Loan Eligibility

While there are multiple factors that you need to consider when determining your eligibility for a personal loan, there are only a few ways to improve your chances of being approved for a loan. The following are some tips to enhance your eligibility for a personal loan:

• Maintain a high credit score of 750 and above: Having a credit score of 750 and above increases your chances of getting loan approval that too at lower interest rates. A higher credit score also increases your access to instant personal loan offers from lenders with whom you have an existing deposit/loan account or credit cards. Repaying your credit card bills and loan EMIs in full by their due dates, avoiding making multiple loan/credit card applications within a short span, etc. can help you steadily improve your credit score.
• Add a co-applicant: Adding a close family member, such as spouse, parents, children, etc., to your personal loan application can also help in improving your eligibility for a personal loan. At present, not all banks and NBFCs allow co-borrowers in case of personal loans. However, having a co-borrower, if possible, can definitely improve your personal loan eligibility and thus, your chances of availing personal loan as in such cases, lenders consider credit scores and repayment capacity of both the applicants.
• Avoid frequent job changes: Lenders also consider an applicant’s employment history and stability when evaluating their personal loan eligibility. Lenders may hesitate giving out personal loans to applicants who as a practice change their jobs frequently. Such practice reflects career instability, which increases the credit risk for the lenders. Therefore, applicants must try to avoid job hopping, especially when they are planning to take a personal loan in the near future.
• Avoid multiple loan applications: On receiving your personal loan application, lenders fetch your credit report from credit bureaus to evaluate your creditworthiness. Such lender initiated credit report requests are known as hard enquiries. These hard enquiries reflect in your credit report, thereby reducing your credit score by a few points. Moreover, making multiple credit enquiries within a short span of time can show you as a ‘credit hungry’ borrower, which may lead to loan rejections by some lenders. Therefore, instead of directly submitting loan applications to multiple lenders, visit online financial marketplaces like Paisabazaar.com to choose the optimum personal loan offer from multiple loan options. Credit report requests generated through online financial marketplaces are considered as soft enquiries and they do not affect your credit score.

FAQs

1. How much personal loan can I get based on my salary?

Ans. Lenders usually use the Multiplier Method and EMI/NMI Ratio or a combination of these two methods to calculate your personal loan amount eligibility. Under the Multiplier Method, lenders calculate personal loan amount on the basis of a predetermined multiple (ranging anywhere between 10 to 24 times) of the applicant’s net monthly income. EMI/NMI ratio, on the other hand, is the proportion of your net monthly income (NMI) spent on servicing your existing EMIs as well as the EMI of the new loan. Lenders usually prefer sanctioning personal loans to applicants having EMI/NMI ratio of up to 50-55%.

The aforementioned methods of personal loan amount calculation can be time-consuming and tedious for many; therefore many lenders offer online personal loan eligibility calculators to help prospective borrowers know their eligible personal loan amount in no time with ease. These online personal loan eligibility calculators give results in less than a second on the basis of a few basic details such as their monthly income, loan tenure, personal loan interest rate and existing EMIs (if any).

2. Can I apply for a personal loan online with a low salary?

Ans. Yes, even if you have a low salary you may be able to apply for a personal loan. This is because not all lender specifies a minimum salary to be eligible for a personal loan. However, the loan amount sanctioned will typically be below and you may also be charged a high rate of interest.

Click to know which banks and NBFCs have low salary requirements.

3. What is the minimum salary to be eligible for an SBI personal loan?

Ans. Currently, the minimum salary to be eligible for an SBI personal loan is Rs. 15,000. However, meeting the minimum salary criteria does not guarantee that your loan application will be approved.