Personal loans can help people in getting the money needed to meet their financial obligations or to meet their desires. You can be an individual who saves money on a regular basis so that you can have enough to survive a rainy day but even after doing so you may not be able to deal with the financial troubles that are associated with an unfortunate and uncertain event in life. This is why you will need the help of a personal loan that can offer you the money that you need for meeting your financial responsibilities.
By applying for a personal loan, you will be able to get the money that you need to meet your financial responsibilities in times of an emergency. Even if you have a very low credit score, you will be able to acquire the money that you need. The loan amount offered can be reasonably high and it can help you to meet your financial requirements. The loan application can be processed within 2 – 3 working days and as soon as the application is processed the money will be credited to your specified bank account. The lender will offer you a decent amount of time to pay off the borrowed amount.
Even though personal loans are offered by several lenders in the country, the process of getting a personal loan is not without hassles. You will need to meet a variety of criteria to be eligible for a loan and the amount sanctioned will also differ from one lender to the other. The loan amount is usually dependent on several factors such as your credit score, monthly income, existing debts, and monthly payment obligations, relationship with the bank, overall work experience, etc. Also, the maximum amount offered as a personal loan may vary from one lender to another.
How does Credit Score Affect Personal Loan Amount?
Your credit score offers the lender a detailed insight into your borrowing habit, whether you make your payments on time and how frequently you borrow money. If your credit score is high, it will indicate that you borrow money sensibly and pay off your loans and credit card debts responsibly. It also shows that you make payments on a regular basis and are not at the risk of defaulting on your payments. Hence, the lenders will be more likely to grant a higher loan amount to you as they will consider you as a low credit risk.
The lenders will examine your credit history to check your past and existing credit relationships with banks and financial institutions. If you’ve been late on a credit card payment or have defaulted a personal loan, it will have a negative effect on the personal loan application. If you’ve had loans in the past that were successfully paid off, it adds value to your application. Therefore, staying up to date with payments of loans and credit cards is of utmost importance.
How Much Loan Amount can I Get on My Salary?
Your salary will have a major impact on the amount of money that you can get as a personal loan. In simple terms, the higher your monthly salary, the higher will be the loan amount that you can borrow. Some of the lenders are willing to offer 10 times your monthly take salary as a loan. For example, if your monthly take-home salary is Rs 50,000 you might be able to get a personal loan of up to Rs 5 lakh. The loan amount offered will also depend on a variety of other factors, but a higher salary will surely increase your chances of getting a higher loan amount.
The source of your income is also another important factor considered by the banks and Non-Banking Financial Company (NBFCs) to check your loan eligibility and determine how much they can offer you as a loan. If you are salaried and working with a reputed company, the process becomes easier. Employees of government and PSUs get preference since they are considered to be in stable jobs. Professionals like Doctors and Architects also have an upper hand in this regard. Self-employed applicants will be required to provide multiple documents such as bank statements and ITR supporting their income to prove that they have a steady income and will be able to pay off the loan.
Will My Credit Card Debts Affect My Personal Loan Amount?
Your existing debts, including other loans and credit card balances, will have a major impact on the amount that can be granted to you as a loan. If your existing debt amount is high, you will have to utilize a major portion of your monthly income to pay off your debts. Credit card payments and other EMIs will consume most of your income and so you will not have much disposable income to make payments for another personal loan. As a result, it is important to pay off your credit card balances and other debts to make sure that you can avail of a higher amount as a loan.
How to Get a Personal Loan with a Low Credit Score?
If your credit score is low and if you feel that traditional banks and financial institutions will not offer you a personal loan, you can opt for a loan against the available credit on your credit card, a loan against your fixed deposit, or a secured loan by offering any financial asset as collateral security. These loans will come with relatively lower interest rates and there are very high chances that your loan application will be approved. The loan amount offered will depend on the value of the collateral that you provide, the amount that you have in your fixed deposit account, or the available credit on your credit card.
Apart from all the points mentioned above, your existing relationship with the bank will also play an important role to determine your personal loan amount. If you have a salary account with the bank from which you are seeking a home loan, it will work in your favor. Furthermore, timely repayments on loans or credit cards from the same bank add immense value to higher personal loan eligibility since they can trust you to make payments on time.
Author Bio: Surya Patra is a qualified webmaster by profession and Marathon Runner/Cyclist by passion with more than 6+ years of expertise in the financial domain. Surya is also an entrepreneur, enthusiastic in storytelling, content writing, and digital marketing professional.