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How Much Personal Loan Can I Get on My Salary?

How Much Personal Loan Can I Get on My Salary?

In the case of personal loans, one doesn't have to provide collateral such as property, gold, or any other sort of asset. Individuals typically utilize personal loans to finance schooling, marriage, healthcare expenses, etc.

How Much Personal Loan Can I Get on My Salary?

When considering applying for a personal loan based on salary, ask the lender this first major question. Besides the key question of maximum personal loans, it is also about meeting all the required eligibility standards. For both salaried and self-employed individuals, the eligibility criteria are completely different.

You must evaluate your current financial situation regarding personal loans since what is required is typically very clear. It is necessary to consider your personal finances as you answer those questions before requesting a loan. The main question is how much money you need for a payday loan.

What Determines Amount of Personal on Salary?

If you are an employee and want to apply for personal loans for salaried employees so there are several things which determines the loan amount, you’ll get on current salary.

Here are the following things that decided how much personal loan you will get on your salary.

  • Your credit rating and employment history.
  • Your monthly income.
  • Your existing debt.
  • The loan type you need will also play a role.

1. Credit Rating and Employment History

A credit score or rating is very important for an individual to avail a personal loan. The amount of debt you can repay is used to determine your creditworthiness. Your credit score is affected whenever you make a payment on a credit card or a loan. The credit rating or score is calculated on a scale of 300 to 850.

If you have a good credit rating, then surely you might be eligible for a large personal loan amount. More than a third of your credit score is based on how well you repaid debt in the past, so paying debt promptly is the key to building a great credit score.

2. You Have a Low Credit Utilization Ratio

A credit utilization ratio helps in comparing how much of your credit you're using and how much is still available for you to avail. To have a high credit score, it is always better not to spend more than your budget. It will help in a maintaining your credit utilization ratio.

3. You Have Availed Other Loans

The financial institutions or private lenders have interest in experiencing about your repaying habit of different types of loans. You have a healthy mix if you have an auto loan, a credit card, and a mortgage. But your credit score might be lower if you only have credit cards.

4. You Are Careful About Borrowing Money

Typically, your willingness to apply for new credit (like loans, credit cards, etc.) also affects your credit score. Each time you apply for credit, your credit rating decreases slightly.

5. Employment History

Having a good employment history can contribute to higher and easy borrowing power.
The longer you hold a job, the more attractive your position will look.

6. Income and Debt-to-Income Ratio

Your income is one of the best assets in determining how much you can borrow. Banks will want to know your updated budget once you add in a new monthly payment. One way a lender evaluates this is to check your debt-to-income ratio (DTI).

A lender computes your debt-to-income ratio by determining the total of your monthly fixed expenditures, including mortgage or rental payments, auto loans, credit cards, and other personal loans. That total is then multiplied by your gross monthly income.

7. Secured Loan vs Unsecured Loan

Since personal loans don't have collateral, the lender cannot take any of your assets if you stop making payments. It can be difficult for a few people to qualify for a large unsecured loan.

You'll be able to borrow more if you have a secured loan. If you put something valuable up as collateral, the bank will take possession of it if you fail to repay the loan funds as agreed. You can typically borrow up to half the value of this collateral.

How to Qualify for a Larger Loan Amount

If you're eligible for a less costly personal loan than needed, it's possible to increase your loan amount. Here are several tips on ways in which you'll be able to receive a bank loan for a larger amount:

  • Shop Around for Several Financial Institutions
  • Opt for a longer repayment period
  • Enlist a cosigner Release collateral (apply for a secured loan)
  • Pay down existing debt Improve your credit score Increase your income.

1. Shop Around for Several Financial Institutions

Analyzing many credit loan providers is crucial for obtaining a big loan. It is especially helpful if you're looking at obtaining a large loan. Check with several credit loan providers to determine how much money you can receive from each.

2. Opt for a Longer Repayment Term

If you would like to request a loan soon, it is a good idea to ask about extending the repayment period. Extending the repayment period will result in lower monthly installments, making it more likely you will be loaned the money you need. Keep in mind that, however, the extended repayment period also affects your monthly interest costs.

3. Enlist a Cosigner

If you or someone you’re close with has excellent credit, ask that person to serve as a cosigner for the loan. In this case, the lender will decide the eligibility criteria according to your credit score and won’t allow you to decide. It is your moral duty to protect them as it is a fact that when someone cosigns a loan for you, they are surely putting their stake at risk for your loan. They will be held accountable if you do not make a payment.

4. Offer Collateral

Collateral is basically linked to secured loans. In case of no collateral for an unsecured loan, you might be able to increase the amount you are eligible for by including more collateral (such as securing a secured loan). In case you give collateral, you will likely be able to receive a greater loan size as well.

5. Pay Down Existing Debt

If you can't obtain the loan amount you need, you might ask the creditor for an explanation. If the debt-to-income ratio is very high which means your debts are much more than your income then surely there can be a problem. If so, work on reducing your debts and increasing payments before requesting another personal loan.

6. Improve Your Credit Score

A higher credit score can help you be approved for loans and other forms of credit. If you are looking to improve your credit score, check all the major discrepancies. Checking for payment errors or any big loan amount you never applied for can be a major reason for a low credit score. Get a free credit report copy, then look for errors.

7. Increase Your Income

A new career or secondary occupation can change your loan request. It might take up to a few months for a side job or gig to show results on your earnings -- and months more for lenders to supply you with evidence of income. Nevertheless, if you're borrowing for business purposes like debt reduction or a home renovation project, PGD may be a better choice.

Borrowers don't need to give up property to obtain an unsecured loan. A limit is placed on the loan amount the borrower can ask based on the borrower's annual salary. Speak with a financial advisor if you think your credit rating is too low due to not having enough property you own.

If you submit all of the information required by a lender to obtain a personal loan, loan disbursement will occur as quickly as one business day so long as you are approved. However, this timeline is contingent on the progress of a lender's loan approval procedure.

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