What is FOIR and How is it Calculated?

FOIR stands for Fixed Obligation to Income Ratio. This financial metric is used in determining your creditworthiness and ability to repay a Loan. In this, the borrower's fixed monthly obligations, such as loan EMIs, credit card payments, and rent, are divided by their monthly income. The FOIR ratio is expressed as a percentage, which we use while assessing your loan application.

How is FOIR related to Personal Loans?

The FOIR meaning is an important factor for Personal Loans because it helps us determine the amount of risk associated with lending money. A high FOIR ratio indicates that a borrower has a high amount of fixed obligations in proportion to their income. This limits our ability to repay a loan. On the other hand, what the FOIR ratio suggests by showing a low ratio is that a borrower has a lower amount of fixed obligations in proportion to their income, which may make them a lower-risk borrower.
 

Maintaining a low FOIR ratio is important for potential borrowers as it can help improve their chances of getting approved for a loan. To improve their creditworthiness, paying off existing debts or reducing monthly expenses is a go-to solution.
 

Maximum FOIR Ratio

Typically we have a maximum FOIR ratio to which we are willing to lend. Our decision will depend on a borrower's credit score, employment history, and financial stability.

Instructions for Calculating FOIR for Personal Loans

When applying for a Personal Loan, it's important to understand your financial obligations and capabilities to ensure you can afford the loan repayments. One way to do this is by calculating your FOIR which compares your fixed monthly obligations to your monthly income, expressed as a percentage. By calculating your FOIR, you can determine your ability to repay the loan.

To calculate your FOIR for a Personal Loan, you need to follow these simple steps:

Step 1: Add up all your fixed monthly obligations, which include any recurring expenses that you have to pay every month. These can include rent, existing loan EMIs, credit card payments, and any other monthly debt obligations that you have. Make sure to include all of these expenses to get an accurate calculation of your monthly financial obligations.
 

Step 2: Calculate your monthly income, which includes all sources of income that you receive every month. This can include your salary, freelance work, rental income, or any other sources of income that you have. Adding up all of your income sources will give you an idea of how much money you have coming in every month.
 

Step 3: Divide your fixed monthly obligations by your monthly income to calculate your FOIR ratio. This will give you a percentage that indicates how much of your income is being used to pay off your fixed monthly obligations. For example, if your fixed monthly obligations are Rs 25,000 and your monthly income is Rs 60,000, then your FOIR calculation would be (25,000/60,000) x 100 = 41.67%.
 

Overview of Our Personal Loan Application Process

1. Check your eligibility:

   Ensure that you meet the eligibility criteria. This includes a minimum monthly income of Rs 15,000, age between 21-58 years, credit score of 600 or more and KYC documents such as Aadhaar linked with mobile no., and PAN card.
    

2. Determine loan amount and tenure:

   Decide on the loan amount you need and the repayment tenure that suits your financial situation. For this, you can use our Personal Loan EMI calculator on our website. It will give you results based on your inputs and help you plan your repayments. When you calculate EMI for Personal Loan and comparing loan options for different loan amounts, interest rates, and tenure help you find the best offer.
    

3. Gather required documents:

   Collect the necessary documents such as the last six months' account statement, Aadhaar card and PAN card. When you upload these documents, we verify your details.
    

4. Apply for the loan:

   Fill out the loan application form online and upload the above documents at our portal.
    

5. Get Approval within 24 Hours:

   Wait no more; we'll process your application and approve your loan within 24 hours of your application. Once approved, you will receive a loan agreement that outlines the terms and conditions of the loan.
    

6. Accept the agreement:

   Read the loan agreement carefully and accept it if you agree to the terms and conditions.
    

7. Receive the funds:

   Once you accept the loan agreement, we will disburse the loan amount to your account.
    

8. Repay the loan:

   Repay the loan in accordance with the repayment schedule agreed upon in the loan agreement.
    

By following these steps, you can successfully apply for a Personal Loan with us and meet your financial needs.