What is the Personal loan eligibility for a 25,000 salary?

Securing a personal loan with a monthly salary of ₹25,000 is possible, but you need to fulfil specific eligibility criteria to improve your chances of approval.

Eligibility criteria to apply for a personal loan typically include the following:

• Residence: The applicant must be an Indian citizen
• Age: the applicant must meet the minimum age requirement of 21 years to be eligible for the loan.
• Income: Some lending institutions require a minimum income of around ₹15,000 to be eligible for a personal loan, although the exact amount may vary across institutions. When applicants demonstrate sufficient income, their applications are viewed more favourably.
• Credit score: A credit score is used to determine creditworthiness, which refers to a borrower's history of effectively managing debt. Credit scores typically range from 300 to 900, with scores above 750 generally considered good.

Financial institutions usually employ two methods to calculate the loan amount they can sanction to a personal loan applicant:

Fixed Obligations to Income Ratio (FOIR) Method:

• Under this approach, the ratio of the applicant's total monthly obligations to their monthly income is evaluated.
• Unlike the multiplier method, the FOIR method considers the borrower's expenses in addition to their income.
• This method provides a more comprehensive assessment of the applicant's financial situation.
  Multiplier Method:
• In this method, lending institutions sanction a personal loan amount that is a multiple of the applicant's monthly income.
• The multiple can range from 10 to 20 times the monthly income, depending on the specific financial institution's policies.
• This method is more straightforward but may not account for the borrower's overall financial obligations.

For an individual earning ₹25,000 per month, the loan amount sanctioned will depend on the specific financial institution's criteria, calculation method, and the applicant's overall financial profile, including credit score and existing loan commitments.

By maintaining a strong financial profile, managing debts responsibly, and understanding the evaluation criteria, applicants can enhance their chances of securing a suitable personal loan amount tailored to their financial capacity.