Required Salary to Qualify for a Personal Loan: Key Insights

Many lenders have a minimum salary requirement when it comes to loan eligibility. While there is no set rule for the minimum salary requirement for loan applications, generally, the minimum amount is between ₹15,000 and ₹30,000. Other factors that influence the salary requirement like location, credit score, and so on. 

This blog guides you on what the required salary is for a personal loan application and how to improve loan eligibility. 

What is the Minimum Salary for Personal Loans?  

Each lender has its salary requirements for a personal loan. It also varies based on factors like one’s location, loan amount, tenure and credit score. While most lenders have a minimum monthly salary between ₹15,000 and ₹30,000. On Zype, the minimum monthly salary requirement is ₹15,000. Understanding these criteria will help you determine your personal loan eligibility and choose the right lender for your needs.  

Key Factors Affecting Salary Requirement 

There is no fixed minimum salary requirement for a personal loan. It depends on the lender’s terms and the profile of the borrower. The lender considers several factors before approving a loan application. These factors include:  

• Location: If you stay in a Tier 1 metro city like Mumbai or Bengaluru, the minimum salary requirement may be higher as compared to a small town, tier 2 or tier 3 city. 

• Employment Status: Lenders prefer borrowers with a stable monthly income. Thus, some lenders may prefer a salaried individual over a self-employed person. With a salaried individual, there is more assurance of timely repayment for the lender. 

• Repayment History: The lender always checks the credit history of the loan applicant. You are more likely to get the loan approved if you have a record of consistent and timely repayment. 

• Credit Score: Good credit score plays an important role in determining the loan terms. If you have a high credit score, you are likely to get a loan on favourable terms. A higher credit score often translates to better loan terms and lower interest rates. 

• Existing Credit: If you have any outstanding loans or credit that you need to repay, the lender may require you to have a higher salary to ensure repayment capability 

Minimum Salary Requirements for Different Loan Amounts 

You may wonder how much loan you can avail yourself based on your salary. Well, there is no fixed amount or rule to determine the loan amount for a particular salary.  

A general rule of thumb is personal loan to salaried individuals is granted up to 30 times their monthly salary. Thus, for instance, if you earn 30,000 per month, you are likely to get a loan up to 9 lakhs.  

However, this is not a standard or set criteria and the minimum salary requirement varies across lenders. It is advisable to maintain a good credit history, credit score, low debt-to-income ratio, to get a loan at favorable terms. 

Also Read: Get Low Salary Personal Loan  

Role of CIBIL Score and Employment Type in Eligibility   

Both the CIBIL score and the employment type of the loan applicant play an important role in personal loan eligibility. 

CIBIL Score 

• Your CIBIL score informs the lender about your credit history and helps them determine your creditworthiness. 

• A high CIBIL score (above 750) increases loan approval chances and favourable loan terms. 

• A low CIBIL score (below 600) may lead to loan rejection, or the lender may offer you a loan at strict terms with a high interest rate and shorter loan tenure. 

Employment Type

• Salaried individuals: Lenders prefer salaried employees as they have a steady income source to repay the loan. Additionally, if you work at a renowned company or hold a government job, you increase your loan approval chances as well. 

• Self-employed individuals: Lenders may consider self-employed individuals riskier as they have variable or unstable income sources. They may request proof of regular income sources to approve a loan. Additionally, they may offer loans on a bit stricter term as compared to salaried ones 

Tips to Improve Eligibility for Personal Loans 

• Increase your credit score: Most lenders require a credit score of 700 and above. If you have a low credit score, improve your credit score by clearing any existing debts and making timely credit payments    

• Build a good credit history: If you have any existing loan or credit, ensure to make on-time repayments. If you have a credit bill, opt to pay the full amount before the due date instead of paying just the minimum amount. 

• Lower debt to income ratio: Clear off any existing debts and avoid taking any new debts.  

• Avoid applying for multiple loan applications: Applying simultaneously for multiple loan applications may impact your credit score negatively since lenders check your credit report. Thus, research and only apply to a lender that fits your financial situation. 

Gone are the days when loan applications and approval used to take weeks to get completed. With personal loan apps like Zype, loan applications get completed online within a few minutes and upon approval, the money is directly deposited in your account. 

Conclusion   

If you want to apply for a personal loan, you must check with the lender about the required minimum salary for loan approval. Being a salaried individual with a good credit score improves your chances of loan approval. Additionally, other factors like your location, credit history, and existing credit affect the minimum required salary. It is important to research and compare lenders and opt for a lender whose eligibility you fulfil and that fits your financial requirements.