Personal Loans are unsecured financial instruments offered by various lenders. A Personal Loan is a very beneficial product for a borrower as he does not have to pay anything as collateral or find any guarantor for his loan. It can be used for all kinds of personal expenses like shopping, luxury travels, hotel bills, tuition fees, remodelling of the home, medical bills, etc.
And since the loan amount is meant to be paid in EMI’s, a borrower does not have to worry much about the total loan amount he is taking, as long as he is a disciplined person capable of managing his income.
A Personal Loan is best for salaried individuals, as they can plan their monthly EMI’s easily depending on their salary amount. In general, lenders prefer individuals who have more than 25,000 – 30,000 income. But it is not set in stone, and lenders offer personal loans to individuals with lower incomes. The loan procedure and the interest rates are easier for people with more than 25-30,000 salaries.
When you apply for a personal loan, a lender considers many things other than the amount of your salary. Like how stable is your job, or how long have you been working at any particular company. Then there is the CIBIL Score; the credit rating of any individual is the essential thing for availing of a personal loan. A CIBIL Score above 750 is considered good by the lenders.
Interest rates are the most important criteria for most individuals, and personal loans generally come with excessive interest rates. The average interest rate today for a Personal Loan is around 12-14%. It sure is high, but as mentioned before, these are unsecured loan types, so the lenders must charge more, as they are taking higher risks on these loans.
Average Interest rates charged by various Banks for personal loans:
|Banks||Interest Rates (p.a.)|
|HDFC Bank||10.5% – 21%|
|ICICI Bank||10.5% – 19%|
|SBI||9.6% – 15.65%|
|Kotak Mahindra Bank||10.25% and above|
|Axis Bank||12% – 21%|
|Bank Of Baroda||10.5% – 12.5%|
|IndusInd Bank||11% – 31.5%|
|Yes Bank||14% – 17%|
The loan amount for personal loans is not so huge in most cases. And it is a mutual thing from both the borrowers and the lender’s end. A borrower wouldn’t be willing to take huge loans at such high-interest rates that personal loans come with, and the lenders may not be willing to disburse huge amounts of unsecured loans, which can leave them exposed to a huge extent.
So, when the amounts are nominal and the payback is done in EMI’s, the higher capping of salary barely matters. A salary of 80k – 1.5 lacs can only help you get the personal loans easily and with an average interest rate. There’s no other benefit attached with that.
A person with a nominal salary of 30-50k will also be eligible to get the same loans. Just that the scrutiny has been done with the second case may be a bit more thorough. Lenders cannot just give away all their money to people with good incomes because they cannot charge higher interest rates. So, they have a specific percentage of money set to give away to people who don’t have large salaries to charge them higher interest rates.
Still, if a person is fixated on how much loan his salary can get them, you can check the table below. It shows the expected amount of Personal Loans different salaried individuals may be eligible for.
|Salary of the Individual||Expected Personal Loan Amount|
The table above shows the expected loan eligibility of individuals based on their income. It is simply based on the risk that a lender might be willing to take depending on the individual’s salary.
However, it is again not set in stone. Lenders give higher amounts to people with lower incomes depending on their CIBIL Score and earn higher interest rates.
So, if you want to get Personal loans of higher amounts, you must have a really good credit history. And you must be willing to pay higher than average interest rates for the loan.