Personal Loan Eligibility
Banks and NBFCs calculate your personal loan eligibility by considering several factors, such as your credit score, age, income, job type, and your employer’s reputation. Here are the key eligibility criteria used by leading lenders, along with tips to improve your chances of getting your loan approved.
How Banks & NBFCs Calculate The Maximum Loan Amount?
Banks & NBFCs basically calculate how much loan you can get by using two main ways:
One is the Multiplier and the other is EMI/NMI Ratio or something they use both.
In the multiplier method, your loan amount is calculated by multiplying your total monthly income by a fixed number. This number usually ranges from 10 to 24 times of your monthly income, depending on the lender's policies.
The EMI/NMI Ratio looks at how much of your monthly income is already used for paying existing EMIs, for example for a car or home loan, and the new loan’s EMI. Lenders prefer this ratio to be 50-55% or lower. This means your total EMIs (existing + new) should not take up more than half of your monthly income.
By using these methods, banks and NBFCs ensure that the instant personal loan amount you get is affordable and manageable for you.
What is The Personal Loan Eligibility?
To be eligible for the best personal loan in India, lenders mainly check your income and ability to repay the loan. They also consider some factors such as your credit score, income, age, job type, work stability, and employer details. Below are some common eligibility criteria set by most lenders for salaried and self-employed borrowers:
| Particulars | For Salaried | For Self Employed |
|---|---|---|
| Age Limit | 18 – 60 years | 21 – 65 years |
| Minimum Income (may vary across lenders) | Rs. 15,000 per month | Rs. 15 lakh p.a. |
| Minimum Work Exp./ Business Continuity | Usually 1 year with some lenders requiring longer work experience. | Usually 3 years of business continuity with some lenders requiring longer period of business continuity |
| Credit Score | Preferably 700 and above | |
Personal Loan Eligibility Criteria By Top Banks & NBFCs
| Lenders | Eligible Loan Amount | Minimum Eligible Income | Eligible Age |
|---|---|---|---|
| Axis Bank | Rs 50,000 – Rs 40 Lakh | Rs. 15,000 per month | 21-60 years |
| SMFG India Credit Company Limited (formerly known as Fullerton India Credit Company Limited) | Up to Rs 30 Lakh | Rs. 20,000 per month | - |
| HDFC Bank | Up to Rs 30 Lakh | Rs. 25,000 per month | 21-60 years |
| ICIC Bank | Up to Rs 50 Lakh | Rs. 30,000 per month | 23-65 years |
| IDFC First Bank | Up to Rs 10 Lakh | Rs. 25,000 per month | 23-60 years |
| IndusInd Bank | Up to Rs 50 Lakh | Rs. 25,000 per month | 21-65 years |
| Kotak Mahindra Bank | Up to Rs 40 Lakh | Rs. 25,000 per month | 21-60 years |
| Moneyview | Rs 5,000 – Rs 10 Lakh | Rs. 13,500 per month | 21-57 years |
| PaySense | Rs 5,000 to Rs 5 Lakh | Rs. 12,000 per month | 21-60 years |
| Punjab National Bank | Up to Rs 20 Lakh | - | Above 18 years |
| State Bank of India | Up to Rs 30 Lakh | Rs. 15,000 per month | 21-76 years |
| Tata Capital | Up to Rs 50 Lakh | Rs. 15,000 per month | 21-65 years |
| YES Bank | Rs 1 Lakh – Rs 40 Lakh | Rs. 25,000 per month | 21-60 years |
| Piramal | Rs 1 Lakh - 25 Lakh | Rs. 27,500 per month | 21-63 years |
| Finnable | Rs 50, 000 - 10 Lakh | Rs. 20, 000 per Month | 21-58 years |
NOTE: Data Updates On 22 January 2025
Factors Affecting Personal Loan Eligibility
There are so many factors that determine your eligibility for a personal loan. Understanding these factors can help you improve your chances of approval of instant personal loans.
- Credit Score :
- A score of 700+ is ideal, as it shows financial discipline and lowers the risk of default.
- Higher scores often mean lower personal loan interest rates.
- Some lenders offer loans to those with low or no credit scores but at higher rates.
- Regularly check and improve your score (aim for 900). Tools like the Step UP Credit Card can help build your credit history.
- Employment Type & Employer Reputation :
- Salaried individuals, especially government employees, are preferred due to stable income.
- Self-employed professionals (like doctors, CAs) may also get lower rates.
- Age :
- Most lenders offer loans to applicants aged 18–65.
- Some banks provide loans to pensioners based on pension income.
- Minimum Income :
- Higher income increases approval chances.
- For salaried individuals, a minimum salary of ₹15,000–₹25,000 is usually required.
- Self-employed individuals need an annual income of ₹2 lakh or more.
- Work/Business Experience :
- Salaried applicants typically need 1+ year of work experience, with some requiring longer tenure in their current job.
- Self-employed individuals should have 3+ years of business experience.
- Repayment Capacity :
- Your total EMIs (including the new loan) should not exceed 50–55% of your income.
- Use tools like the BigMudra EMI Calculator to plan repayments wisely.
By keeping these factors in check, you can boost your chances of securing a personal loan.
Tips To Improve Personal Loan Eligibility
Here are some simple ways to boost your chances of getting a personal loan approved:
Maintain a Good Credit Score (700+) : A credit score of 700 or higher improves your chances of getting personal loan approval that can help you get lower interest rates. Pay your credit card bills and loan EMIs on time, avoid multiple loan applications in a short period, and manage your credit wisely to build a strong score.
Add a Co-Applicant : Including a family member as a co-applicant can boost your chances of your loan application. Lenders consider both applicants credit scores and repayment capacity, which can increase your personal loan eligibility
Avoid Frequent Job Changes : Loan lenders also prefer stable job history, frequent job changes may raise concerns about your financial stability, making lenders doubtful to approve your loan. Try to maintain job consistency, especially if you are planning to apply for a loan.
Limit Multiple Loan Applications : Applying for multiple loans at once can affect your credit negatively and make you appear as a credit-Hungry borrower. Instead use online platforms like BigMudra to compare loan offers without affecting your credit score.
By following these tips, you can improve your personal loan eligibility and increase your chances of approval.
Conclusion
Improving your personal loan eligibility is all about maintaining a strong credit score, ensuring financial stability, and making smart borrowing decisions. By managing your credit responsibly, avoiding frequent job changes, and limiting multiple loan applications, you can enhance your chances of personal loan loan approval. Adding a co-applicant, if possible, can also strengthen your application. With these steps, you will be better positioned to secure a personal loan with favorable terms.
FAQs
What credit score is needed for a personal loan?
A score of 700 or higher improves your chances of approval and helps secure lower interest rates.Can a co-applicant improve my loan eligibility?
Yes, adding a co-applicant with a good credit score and stable income can strengthen your application.Does changing jobs affect loan eligibility?
Frequent job changes can raise concerns about stability, making lenders hesitant to approve your loan.How do multiple loan applications impact eligibility?
Multiple applications can lower your credit score and make you appear as a high-risk borrower, leading to rejections.Where can I compare loan offers without hurting my credit score?
Use online financial marketplaces (like BigMudra) to compare loans.
