How Much Personal Loan Can You Get With Rs 40,000 Salary?

For salary earners, the amount of personal loan that they can get is closely linked to the salary that they earn. The higher the monthly salary that they earn, the higher is the personal loan that they can get. Banks, NBFCs and other lenders usually deduct your essential, non-discretionary monthly expenses from your salary to calculate your net monthly income or net disposable income. The maximum personal loan that you can get is based on this net monthly income.

Factors Influencing The Eligibility Of Personal Loan:

One of the most popular and commonly opted debt products are personal loans because of their easy, quick, and convenient process of application. Moreover, they can also be issued for various types of personal expenses without any rigidity, such as mortgage loans or automobile loans.

Banks and non-banking financial organizations offer unsecured personal loans to borrowers with a good credit score, strong credit history, and payback capacity. However, it is crucial for borrowers to meet all the eligibility criteria developed by the particular lender in order to apply for a personal loan. The most common factors that affect loan eligibility are as follows:

• Applicant’s Monthly Income:

  This is the most common eligibility criteria to ensure that the applicant has a regular source of income to be able to repay the loan amount. It has been stipulated by most lenders that applicants must earn a monthly salary of at least 15,000 to be eligible for personal loan application. This amount may change in case of certain lenders.

  As opting for personal loans doesn’t require collateral, low-income borrowers are considered to be risky customers by the lender.

• Credit Score Of The Borrower:

  While monthly income plays a significant role in determining personal loan eligibility, the lender also counts the borrower’s credit score. A low credit score will lower the chance of loan approval.

• Existing Loan Obligations:

  The borrower must not be involved in any existing loan obligations while applying for a personal loan. This will represent the borrower as a risky customer who might not be able to repay the amount. Moreover, in case of any existing loan obligation, applying for a new loan will increase the financial responsibility of repaying two loans at the same time, which can be stressful.

How Much Personal Loan Can One Get With Rs. 40,000 Salary?

Generally, the amount sanctioned by the lender is calculated in multiples of the total monthly income of the borrower, which can range from 10 to 20 times and even higher. This represents that a person with a monthly salary of 40,000 may be eligible for a loan of Rs 4 to 8 Lakhs. If someone has a high credit score, this multiple can go higher.

Moreover, the FOIR( Fixed Obligation Income Ratio) and EMI/NMI ratio are also considered to determine the maximum amount of monthly installment that a person with a Rs 40,000 salary can afford.

This calculation is based on deductions of the borrower’s monthly expenses from her salary. The ratio usually preferred by lenders is between 40-50 %. Therefore, for a person with a Rs 40,000 salary, the EMI must not exceed Rs. 20,000.

Conclusion:

However, the loan tenure for personal loans typically ranges from several months to six years or more. In general, the rate of interest for personal loans ranges from 10% to 35%, depending on the credit score and credit history of the borrower.

A credit score above 750 is considered to be strong. On the other hand, anything below 550-600 is considered to be weak creditworthiness and makes it difficult for the borrower to secure a personal loan. Consider all these before opting for a personal loan.