When we start earning on our own and become self-independent, a common thought that arises in all of our minds is that never again will we need to borrow money from anyone. But no matter how well established we are and how much of a steady salary we earn every month, sometimes even the best of us face a cash crunch situation, where we need a quick way out.
In such situations, although there are a variety of options to choose from, one of the very best is to take a personal loan. A personal loan, which is a short term unsecured loan usually between ₹10,000 to ₹500,000, is transferred directly to your bank account by a lender who specializes in short term lending transactions.
If you are a salaried employee, getting approved for a personal loan becomes much easier, as the lender uses your steady salary as a guarantee that you will pay back your loan on time. But do you know how much amount you can get on a personal loan when you are salaried?
If this question has been pondering your mind for some time now, then this blog post is for you.
In today’s article, we will discuss the various factors that are taken into account while approving your personal loan application and also share with you the various amounts you can avail as a salaried employee from a personal loan. Let’s get started.
What Is a Personal Loan?
In simple terms, a personal loan is a short term, unsecured loan rendered by a lender who specializes in short term lending transactions. The amount of personal loan ranges between ₹10,000 all the way to ₹500,000 with some lenders rendering higher amounts up to ₹200,0000.
While the application process for a personal loan is very simple and straightforward, thanks to the huge number of lenders who are present in the market, getting it approved might be a challenge.
Factors Under Consideration
Now that you know what a personal loan is, let us take a look at some of the factors that are taken into consideration when you apply for a personal loan.
One of the first and most important factors that are taken into consideration when you apply for a personal loan is your credit score. In simple terms, you can understand your credit score as a number that determines your creditworthiness or, in other terms, how likely you are to pay back a loan when you take one.
In India, there are 2 main organizations that keep track of your credit score, and they are CIBIL and Experian. Both private organizations by nature take into consideration four main factors when assigning you a credit score; the number of loans you have taken in the past, the total amount of debt that you presently have, historical data on the EMIs you have paid, any missed payments or defaults which might have occurred in the past.
Depending on the lender you choose to apply with, they will either consult with your CIBIL score or Experian Score to determine if you are worthy of getting the loan or not.
Your Monthly Income
The second factor that is taken into consideration when you are applying for a personal loan is your monthly income. In this aspect, your application is categorized into either of two categories, salaried employee and self-employed professional. Depending on the category you fall into, your application is reviewed and then approved if you are eligible for the loan.
Generally, it has been observed that if you are a salaried employee, your chances of getting your personal loan approved are higher. While there is no set forth amount you need to earn every month in order to get a personal loan, different companies put forward different criteria based on their individual risk-taking abilities.
For example, Money View, which is one of the leading personal loan lenders in India, has a mandate which states that you need to have a minimum monthly income of ₹13,400 in order to apply for a personal loan on their website.
Along with this, when you start doing your own research and check with multiple lenders, you will realize that each of them usually has a higher minimum income amount when you are self-employed as compared to when you are a salaried professional.
Thanks to the digital India movement, most personal loan applications these days are completely online. All you need to do is either visit the official website of the lender or download their smartphone application and enter your details.
When applying for a personal loan, you will need the following documents.
- Aadhar Card
- PAN Card
- Residential and Permanent Address
- Phone Number
- Bank Statement
Although these are basic details and requirements, almost every personal loan lender in the market asks for these and takes them as factors under consideration when reviewing your personal loan application.
Thus you need to make sure that you keep all these details handy and that each of them is linked with one another so that your lender can seamlessly verify all your details.
How many loans Can You Get Depending on Your Salary?
Now that you are aware of all the criteria that are taken into consideration when lenders review your personal loan application, the obvious question that must be pondering your mind is, how much amount can I loan if I am a salaried employee?
Well, there is no clear mandate on how much money you can loan when you are salaried, but the general understanding in the industry is that the higher your salary, the better your credit score and the greater is the stability of your job, the higher will be the amount which you can loan.
Most lenders in India today give out personal loans in the range of ₹10,000 to ₹500,000 with some lenders giving as high as ₹25,000,00. Depending on the above-mentioned factors, the lender will assess your application and then approve your loan amount.
Getting a personal loan when you are in a cash crunch situation is one of the best things to do. Not only will it save you from your cash crunch situation, but also help you build a healthy lending habit and contribute to a higher credit score in the future. So go ahead and apply for a personal loan from your favorite lender today.