Personal Loan Eligibility - What Is The Salary Requirement For Personal Loan

In recent years, a personal loan has emerged as a very common source of raising funds to fulfil planned expenditures or emergency costs. Several banks and non-banking financial companies (NBFCs) have started offering a hassle-free process for the procurement of loans. However, certain eligibility criteria have to be met, specifically in terms of the minimum salary requirement.

Most of the banks and NBFCs have the following common set of eligibility criteria for a personal loan:

1. Age: The minimum age for personal loans varies from 21 years to 23 years, and the maximum age limit varies from 55 years to 65 years.
2. Employment: The total experience requirement of an individual (either salaried professional or self-employed) varies between 2 and 3 years.
3. Current Company: The experience of a salaried professional should 0with his/her current employer varies from 1 month to 1 year.
4. Salary: The minimum salary eligibility for a personal loan depends on various factors, like the place of residence, type of residence, existing loans, etc.

While most of the eligibility criteria remain the same for all the applicants, the minimum salary requirement differs on various grounds, like:

1. Credit Score: A better credit score implies that the borrower has been diligent with his/her previous loan or credit card payments. A good credit score allows some relaxation in minimum salary requirements.
2. City of Residence: The applicants residing in metropolitan cities have a higher minimum salary threshold as compared to those living in smaller cities and towns. This is because; the latter have higher purchasing power than the former. Thus, the borrowers in metros will have to require a higher remuneration to be eligible for personal loans.
3. Residence Type: An applicant who lives in a self-owned house rather than rented accommodation, are likely to require a lower salary for personal loans, as he/she does not have the monthly liability of rent.
4. Job Stability: When an applicant remains in a job for a considerably long period, it proves job security and stability. Such applicants are likely to have a lower salary threshold.
5. Prior/Existing Loans/Credits: When an applicant has existing loans or credit card liabilities, then the minimum salary requirement automatically increases. This is because the applicant already has monthly financial commitments. Thus, the borrower has to have a higher income to accommodate another equate monthly instalment.

Type of Employment: The salaried applicants are likely to have a lower threshold of a minimum salary as compared to self-employed applicants. The reason being that salaried personnel have a constant and consistent income for repayment security. On the other hand, self-employed applicants cannot have a constant monthly income.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.