Personal loans are the most sought financial support in India, especially for salaried individuals. As they are unsecured loans, they do not require any collateral and are approved within minutes. But the majority of the people are not aware of the benefits and eligibility of availing a Personal Loan. How much time will it take for loan approval, and what will be the minimum salary criteria for Personal Loans? Such questions often create doubts on whether to go for it or not.
Thanks to the online mode of a loan application, it is easy for an amateur to apply for Personal Loans to overcome the financial crisis via Personal Loan apps. The eligibility criteria have been made simple and less complicated with a minimum salary slab so that even the low salary income group can avail the benefit of Personal Loan. A minimum salary of 15000 is the mandatory criteria to apply for a Personal Loan at Hero FinCorp.
Personal Loan for Salaried The monthly income of a person is significant when it comes to Personal Loan eligibility. Different lenders have different criteria for Personal Loan. Lenders offer a loan on the below-mentioned criteria for salaried income individuals:
A considerable amount of the population in India falls under a low-income group. Being an unsecured loan, the Personal Loan has credit risks attached when it comes to repayment. So, it is mandatory for lenders to check the monthly income of the applicant to nullify the credit risk. Verification of monthly income is mainly done to probe the payment ability of the applicant.
Also Read: How Personal Loans Help During An Emergency
As a salaried employee, you will be required to keep your salary slips handy and ensure that you have duly filed your income tax returns. Typically, determining how much salary you will require to qualify for a Personal Loan will be decided by the lender. Here are the basic eligibility requirements for loan approval at Hero FinCorp:
Also Read: Understanding What is Flexi Personal Loan and When it is Ideal
Once you meet the above criteria, the lender approves you for loan and proceeds to the next step, which is determining the amount you qualify for using the multiplier method.
This is the standard method used by financial institutions to determine loan amounts. Most financial institutions will typically lend 15 to 30 times your monthly income. If you earn a high salary and work for a reputable company, the higher multiplier will be used when performing your credit appraisal.
Assume you work for a start-up company and earn Rs 15,000 per month. The lender considers you a risky borrower and categorises you with a multiplier of 15. In this case, the maximum loan amount you are eligible for is Rs 2,25,000, with a repayment period of 36 months.
The table below shows the maximum expected loan amount based on a multiplier of 15.
Monthly Salary | Expected Loan Amount |
Rs 15,000 | Rs 2,25,000 |
Rs 20,000 | Rs 3,00,000 |
Rs 25,000 | Rs 3,75,000 |
Rs 30,000 | Rs 4,50,000 |
A personal salary loan is available for the maximum value of Rs 5,00,000. It means that having a monthly income of Rs 50,000 does not mean that you will be approved for a loan over Rs 5 Lakh.
Also Read: Advance salary needed? Get a Personal Loan approved in 5 minutes
Whether it is related to your loan approval or determining the Personal Loan amount, a variety of factors come into play. These are –
Age is another vital aspect that decides the Personal Loan limit for your profile. If you are over 55 years of age and are nearing retirement, the lender might not take a risk approving you for a large amount of loan. Post-retirement, most people lose their earning potential and are likely to default on their debts if they do not have a backup repayment plan.
A credit report is a record of all your current and previous debts. It informs the lenders about how you handled your previous debts and how many missed EMIs and loan defaults occurred in the past. In the event your report reveals several hard inquiries, loan settlement cases, and several missed debt payments, your application will be rejected, or you will be approved for a high-interest loan regardless of your monthly income.
FOIR stands for fixed obligation income ratio. It assists the lender in determining how much of your income is going toward debt repayment and other vital expenses like insurance premiums, child education fees, and so on.
Lenders will usually approve you for a loan if this ratio is between 50 and 75%. However, keep in mind that the higher the FOIR, the lower the amount you qualify for.
You can calculate this ratio using the following formula.
FOIR = (Total Monthly EMI + Other Fixed Expenses) ÷ (Monthly Salary)
Financial institutions typically consider approving large loans to applicants who work for government agencies, multinational corporations, or public sector units. The reason is job security and timely salary credit. However, if you work for a start-up that pays you Rs 1 Lakh but there is no fixed date in the month when the salary is credited to your account, the lender will only sanction a small amount if you are approved for a loan.
To apply for a Personal Loan, you'll typically need to provide the following documents:
Documents Required | Salaried | Self-Employed |
Mandatory Documents | Duly filled application form, Passport-size photograph | Duly filled application form, Passport-size photograph |
Identity Proof | Driving License, Passport, PAN Card, Aadhaar Card (Any One) | Driving License, Passport, PAN Card, Aadhaar Card (Any One) |
Address Proof | Driving License, Passport, Aadhaar Card, Ration Card, Utility Bill (Any One) | Driving License, Passport, Aadhaar Card, Ration Card, Utility Bill (Any One), Office Address Proof (if applicable) |
Ownership Proof | Residence Ownership Proof (Electricity Bill, Maintenance Bill, Property Document) | Business Existence Proof (Tax Registration, Shop Establishment Proof, Company Registration Certificate) |
Income Proof | Last 6 Months Salary Slips, Bank Statements, and Form 16 | Last 6 Months' Bank Statements and ITR for 2 Years |
Also Read: How Much Loan Amount Is Available for My Salary
Here are the key points about instant loans and how income affects approval:
Securing a Personal Loan in India is accessible to a wide range of individuals, particularly salaried employees with a minimum monthly income of Rs 15,000. Loan approval is influenced by various factors such as age, work experience, and credit score. Lenders generally use a multiplier method to determine the loan amount, based on your salary. While the minimum salary criteria may vary across lenders, it's clear that even individuals with lower incomes can access loans, provided they meet the other eligibility requirements. As always, it's important to assess your repayment capacity before applying to ensure that you can comfortably manage the loan.
To approve for a Personal Loan, most lenders require a minimum monthly income. At Hero Fincorp, the minimum monthly income of Rs 15,000.
Yes, Personal Loans can be obtained by people with low incomes. The minimum income requirement differs from lender to lender. At Hero FinCorp, you can get a Personal Loan with income of Rs 15,000 per month.
To apply for a Personal Loan online with Hero Fincorp, you only need your KYC details and proof of income.
Lenders give loans depending on your monthly income, with some adopting a multiplier approach. For instance, if your monthly income is Rs 15,000, you can get up to a loan of Rs 2,25,000. Greater income could lead to larger loan amounts.
The age requirement for Personal Loans can differ from lender to lender. At Hero FinCorp, you should be between 21 to 58 years.
A good credit rating is instrumental in loan sanction. Lenders verify your credit history to evaluate your potential to repay the loan. A poor credit rating may result in loan refusal or sanctioning at a higher rate of interest.
Personal loans can be approved instantly when you apply online with Hero FinCorp. However, you should meet the eligibility requirements.
Yes, you can apply for a Personal Loan as a self-employed individual. Before applying, you should check the eligibility criteria of the loan.
The multiplier technique is employed by lenders to calculate the amount of loan according to your monthly income. Lenders tend to lend 15 to 30 times your monthly income, subject to other factors such as the stability of your job and your credit score.
No, Personal Loans are unsecured, so you do not have to provide any security or collateral. But you should meet the eligibility requirement of the loan.
Disclaimer: The information provided in this blog post is intended for informational purposes only. The content is based on research and opinions available at the time of writing. While we strive to ensure accuracy, we do not claim to be exhaustive or definitive. Readers are advised to independently verify any details mentioned here, such as specifications, features, and availability, before making any decisions. Hero FinCorp does not take responsibility for any discrepancies, inaccuracies, or changes that may occur after the publication of this blog. The choice to rely on the information presented herein is at the reader's discretion, and we recommend consulting official sources and experts for the most up-to-date and accurate information about the featured products.
Hero Fincorp offers a wide range of financial products including Personal Loans for personal needs, Business Loans to support business growth, Used Car Loans for purchasing pre-owned vehicles, Two-Wheeler Loans for bike financing, and Loan Against Property for leveraging real estate assets. We provide tailored solutions with quick processing, minimal paperwork, and flexible repayment options for smooth and convenient borrowing experience.