Personal Loan for Salary Less than Rs. 20,000

Banks & NBFCs that Offer Personal Loan on Salary Less than Rs. 20,000

The following table lists lenders that offer personal loans to applicants having salaries of less than Rs. 20,000. The table also mentions personal loan interest rates charged by these lenders:

*Applicable for selected customers

Last updated on 11 November 2024.

How Much Personal Loan Can I Get on a Salary of Rs 20,000 or Lower?

There are two methods to determine an applicant’s eligible personal loan amount – Multiplier Method and EMI/NMI Ratio. Banks and NBFCs may use either of these two methods of calculation or both to determine personal loan amount eligibility for an applicant.

• Multiplier Method: Under this method, the personal loan amount is calculated basis predetermined multiple of the applicant’s net salary. This multiple can range from 10 to 24 times of the applicant’s take-home salary, depending on the lender and monthly income.

Maximum Personal Loan for Salaries Less Than Rs. 20,000 as per Multiplier Method

Note: For the above calculation, existing loan repayment obligations has been considered to be zero. For the multiplier method, the maximum loan amount is 15 times the NMI.

• EMI/NMI Ratio: Under this method, lenders calculate the proportion of an applicant’s net monthly income (NMI) that goes into paying his loan EMIs, including the EMI of the proposed loan. Lenders usually prefer approving personal loans of applicants having EMI/NMI ratio of up to 50-55%.

Factors that determine an applicant’s EMI/NMI ratio includes his net monthly income, tenure and interest rate. Changing salary or monthly EMI obligations in a short time can be challenging. However, applicants can choose to extend their loan tenure or avail low interest rate personal loans to reduce their EMI/NMI ratio and thereby, improve their eligibility to avail a higher personal loan amount.

Other Factors that Affect Personal Loan Eligibility

Besides your income and repayment capacity, several other factors that affect your personal loan eligibility are as follows:

• Credit Score: Banks and NBFCs prefer offering personal loans to applicants having credit scores of at least 750. This is because applicants having such high credit scores are considered to be financially disciplines and hence, are less likely to miss their loan payments. This is also the reason why lenders fix lower interest rates for such applicants. The credit score of an applicant is also considered when determining customers eligible for instant personal loan Lenders usually offer such pre-approved personal loan offers to their existing customers having excellent credit profiles. Hence, having high credit scores can also increase your eligibility for pre-approved personal loan offers from banks and NBFCs with whom you have existing deposit, credit card or loan accounts.
• Employer Profile: Lenders prefer offering personal loans to salaried applicants due to their higher income certainty. This is also the reason why they fix lower interest rates for salaried applicants. For the same reason, among salaried applicants, government employees are the most preferred by lenders followed by the reputed MNCs and corporates.
• Work/Business Experience: To qualify for a personal loan, many lenders require their salaried applicants to have a total work experience of at least 2 years with at least 6 months in the current organisation. Self-employed applicants, on the other hand, need to have been in the current business for at least 2 years to be eligible for a personal loan.