Personal Loan Eligibility: What's the Minimum Salary Required?
Personal Loans are a popular financing option for salaried individuals in India. They provide quick access to funds for various needs, from medical emergencies to home renovations. However, Personal Loan eligibility hinges on several factors, with salary being a crucial one. In this article, explore the minimum salary required for Personal Loans, understand how salary influences loan approval, and learn tips to boost loan eligibility.
Understanding Personal Loan Eligibility for Salaried Persons
Personal Loan eligibility for salaried person is determined by a combination of factors, including the applicant's credit score, employment stability, repayment capacity, and most importantly, salary. Lenders assess these parameters to gauge the borrower's creditworthiness and ability to repay the loan.
- Credit score : A good credit score (above 750) indicates a strong repayment history and increases chances of loan approval.
- Employment stability : Lenders prefer applicants with a stable job and a consistent income source.
- Debt-to-income ratio : This ratio compares one's monthly debt obligations to their income. A lower ratio signifies better repayment capacity.
- Age : Applicants between 21 and 60 years old are generally preferred by lenders.
The Role of Salary in Loan Approval
Salary plays a pivotal role in Personal Loan eligibility. It serves as a key indicator of a borrower's repayment capacity. Lenders typically have a minimum salary requirement for Personal Loans, which varies based on the loan amount, tenure, and the lender's policies. A higher salary indicates a better ability to repay the loan on time. Most lenders have a minimum salary requirement that applicants must meet to be eligible for a Personal Loan.
What’s the Minimum Salary Requirement in 2025?
As of 2025, the required minimum salary for Personal Loan varies among lenders. However, on average, most banks and financial institutions require a minimum monthly salary of ₹25,000 for salaried individuals. Some lenders may have higher requirements, ranging from ₹30,000 to ₹50,000 per month.
It's important to note that meeting the minimum salary requirement doesn't guarantee loan approval. Lenders consider salary in conjunction with other eligibility criteria, such as one's credit score, employment stability, and existing debt obligations.
Salary vs. Other Eligibility Criteria: What Matters More?
While salary is a significant factor in Personal Loan eligibility, it's not the only one. Lenders take a holistic approach when assessing the loan application. A high salary alone may not be sufficient if one has a poor credit score or a high debt-to-income ratio. On the other hand, even if one's salary is slightly below the minimum requirement, a strong credit profile and a stable employment history can improve their chances of loan approval. Lenders may also consider additional income sources, such as rental income or freelance earnings, when evaluating repayment capacity.
Example : Suppose Rohan and Priya, both salaried employees, apply for a Personal Loan of ₹5 lakhs. Rohan earns a monthly salary of ₹50,000 but has a low credit score of 600. Priya, on the other hand, earns ₹35,000 per month but maintains an excellent credit score of 800. In this scenario, despite Rohan's higher salary, Priya may have a better chance of loan approval due to her superior credit profile. Lenders consider the overall financial health and creditworthiness of the applicant.
How to Increase Loan Chances on a Low Income?
Some tips to improve Personal Loan eligibility for salaried persons are:
- Improve credit score : Ensure timely bill payments, maintain a low credit utilisation ratio, and dispute any errors on the credit report.
- Provide collateral : Offering an asset as collateral can mitigate the lender's risk and improve loan eligibility.
- Apply with a co-applicant : Applying with a co-applicant who has a higher salary or a strong credit profile can enhance loan eligibility.
- Choose a longer loan tenure : Opting for a longer repayment period can lower monthly instalments and improve debt-to-income ratio.
Frequently Asked Questions on Salary-Based Loan Approval
- Can I get a Personal Loan for salaried person if I earn less than ₹25,000 per month?
While it may be challenging, some lenders offer Personal Loans to individuals with a lower salary. However, the loan amount and terms may be less favourable. - Does my salary affect the loan amount I can borrow?
Yes, your salary is one of the factors that determine your loan amount. Lenders typically offer a loan amount that is a multiple of your monthly salary, ranging from 10 to 20 times. - Can I apply for a Personal Loan with a co-applicant if my salary is low?
Yes, applying with a co-applicant who has a higher salary can improve your loan eligibility and increase your chances of approval. - Does my salary structure affect Personal Loan eligibility?
Yes, your salary structure matters. Lenders prefer applicants with a higher proportion of basic salary and fewer variable components like incentives or bonuses. - How can I find the best Personal Loan for salaried persons?
Compare loan offers from multiple lenders, considering factors like interest rates, processing fees, and repayment flexibility. You can also check your pre-approved loan offers from banks like Federal Bank to get personalised deals based on your salary and credit profile.
Final Words
Understanding the minimum salary requirement for Personal Loans is crucial when planning to apply for one. Salaried individuals looking for a Personal Loan can consider Federal Bank's offerings. With competitive interest rates and flexible repayment options, Federal Bank can be the perfect partner in fulfilling financial goals.