Five Ways to Increase Your Approved Personal Loan Amount—Without Raising Your Salary

Does this sound familiar? You earn well, have a stable job, and yet whenever you need a personal loan for an emergency, the amount approved is lower than what you actually need.
The truth is that every time you apply for a loan, your steady income is not the only parameter lenders look at. There are several other factors lenders consider before approval. 
Wondering what those are? This blog has listed five things you can do to increase the loan's approved limit. 
 

The Primary Factors That Dictate Your Loan's Approval Limit

While your salary and your job's stability do play a major role, lenders also closely scrutinise the following factors when deciding how much loan amount they approve -

Credit Score

Your credit score is the first thing lenders look at. The higher your score (750+ is excellent), the more confident lenders are in approving higher amounts, as a good score represents responsible repayment behaviour. 

The Debt-to-Income Ratio

Lenders also pay close attention to how much of your monthly take-home income is already going towards paying your debts. If this ratio is high (between 40 and 50%), it tells lenders that you are already financially strained and can have trouble repaying your EMIs.

Multiple Loan Inquiries

Every time you apply for a loan, lenders check your credit score. This is known in the industry as a hard pull. If lenders see multiple hard inquiries on your credit report, within a short period, they see this red flag and again perceive this as another indicator of financial strain.

Bank Statement Micro-Analysis

Some lenders go as far as analysing your bank statements to study your spending habits. Reckless spending behaviour automatically means lower approvals. 

Five Things You Can Do to Increase Your Approved Personal Loan Amount

Here's what you can do to increase your approval limit without a change in salary. 

Improve Your Credit Score

As mentioned earlier, your credit score is the first thing lenders look at. To improve this, make sure you pay all your bills on time. If you have any outstanding dues, try to clear them off asap. Simultaneously, avoid multiple loan applications. 

Lower Your Existing Debt Burden

Try to clear off your smallest debts to improve your debt-to-income ratio. It may surprise you to know that even clearing a small credit card bill worth ₹5,000 could push your approved limit up by several times that amount. 
Always aim to have a debt-to-income ratio of around 30%. That way, you always have the option to get higher loan approvals in case of emergencies.

Opt For Higher Tenures

Opting for a longer repayment tenure will automatically reduce your monthly EMIs. This, from a lender's perspective, means that your repayment capability has now improved.
Pro Tip - Always use a personal loan EMI calculator to see how much your EMIs vary with a change in a loan's tenure. 

Submit Accurate Documentation

Complete and accurate documentation goes a long way in building a lender's confidence in approving higher loan amounts. Ensure that you have all your salary slips in order, submit complete bank statements for the requested number of months, and have valid ID and address proofs.

Apply with a Co-Applicant or Guarantor

In case your credit score is not very healthy, you can also consider adding a co-applicant or a guarantor to your application. With dual income streams sharing the responsibility to repay a single EMI, your chances of getting a higher loan amount also increase. 

Think Beyond Salary for Higher Limits 

Making smart financial decisions is all you need to do to get lenders to approve higher loan amounts. Doing so will not only help you manage your day-to-day finances but also help you get quick access to funds when you need them urgently. 
Ready to apply for a personal loan? Apply for Hero FinCorp's instant personal loan for up to ₹5,00,000. Complete the 100% digital process and get approval within minutes—fast, simple, and hassle-free. 

Frequently Asked Questions

Does staying in my own home improve my approval amount?

Yes, owning a home does signal financial stability to a lender and may positively influence your approved amount. That said, if you are still paying EMIs on the home, your debt-to-income ratio will also be taken into consideration.

Will I get a higher approved amount if I have multiple sources of income?

Multiple sources of income (if fairly consistent) will help your case and result in higher amounts being approved.

Do frequent job changes impact my loan amount? 

Switching jobs too often, despite a higher salary, may in fact reduce the approved amount as lenders value stability as much as your repayment capacity.

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