Personal Loans help you with finance management, big-ticket purchases, debt clearance, and more. With a Personal Loan, any urgent financial problem can be solved. However, financial institutions do not offer Personal Loans to everyone without proper analysis. They extend loan facilities only to applicants with regular and sufficient income to repay the loan.
How Do Financial Institutions Determine Whether an Applicant is Going to Repay the Loan or Not?
They examine factors like credit score, loan history, age, occupational stability, and monthly salary. These factors highlight the repayment capacity and creditworthiness of any loan applicant.
Financial institutions have minimum salary criteria for providing Personal Loans. The personal loan for salaried people depends on criteria that can be different for each financial institution in India. When a person has a stable monthly income, only then can loan EMIs be submitted on time. The borrower may fail to make EMI payments without a steady monthly income. For the same reason, determining the monthly salary of loan applicants is a must for financial institutions and NBFCs. For self-employed individuals, monthly income is considered instead of the monthly salary.
NBFCs make sure that the loan applicant is showing an accurate monthly salary. They demand salary slips for salaried applicants to know the exact monthly salary, while they demand account statements from self-employed applicants to check their monthly income. Once they believe the applicant has ample income to pay the EMIs timely, the loan is approved. Monthly salary/income also plays an important role in the approved loan amount. People with a higher monthly salary are eligible for bigger Personal Loans.
What’s the Minimum Salary Condition for Personal Loans?
The minimum salary criterion can differ from one NBFC to another. Generally, the minimum salary for a Personal Loan in India is INR 20,000. If the monthly salary of an applicant is more than INR 20,000, they can send in their loan application. Individuals with a higher salary than the minimum salary may get a preference for a Personal Loan. The higher the monthly salary, the easier the loan approval and processing.
Before submitting the loan application, it is recommended to check personal loan documents online. For this, you can check the official website of your preferred loan provider. NBFCs mention the minimum salary criteria on their official website. What’s the point of getting your loan application rejected after missing out on the minimum salary condition? For the same reason, it is better to communicate with the financial institution regarding the minimum salary condition.
Other Conditions to Secure a Personal Loan
Only fulfilling the minimum salary condition is not ample. Loan applicants have to meet all the loan conditions to get approved quickly. Besides the minimum salary condition, other eligibility conditions for a Personal Loan are as follows:
- The age of the Personal Loan applicant should be between 21 and 58 years.
- Salaried individuals should have a working experience of at least half a year in the current organisation/company/firm.
- The total working experience of the home loan applicant should not be less than 12 months. When approving a Personal Loan application, occupational stability is an important factor considered by loan providers.
- Some NBFCs also have a minimum credit score condition for a Personal Loan. Individuals should at least maintain a minimum Experian credit score of 630 to get a Personal Loan from new-age NBFCs like Clix Capital.
Is It Impossible to Acquire a Personal Loan With a Low Monthly Salary?
The loan application will be processed smoothly if the monthly salary exceeds the minimum salary. Certain NBFCs also offer low-salary Personal Loans. However, the loan application may take some time to process due to the lower monthly salary of the applicant. Also, the loan provider can reduce the Personal Loan amount in such cases. Low-salary Personal Loans also invite heavy interest charges and bigger EMIs.
Summary
Having a decent monthly salary is important for acquiring a Personal Loan. Financial institutions judge the applicant’s repayment capacity by knowing their monthly salary. In most cases, the minimum salary for Personal Loans is INR 20,000. So, always submit your loan application after you fulfil the minimum salary condition of the loan provider.