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Getting a Personal Loan on a Salary of ₹45,000

When unexpected expenses arise or you have a dream you want to pursue, a personal loan can be a valuable financial tool. However, before applying for one, it’s essential to know how much you can borrow based on your income. If you earn a salary of ₹45,000 per month, we are here to guide you through the factors that lenders consider when determining your loan eligibility and the potential loan amount you might qualify for.

Factors Affecting Your Loan Eligibility

The amount you can secure as a personal loan depends on several factors that lenders carefully evaluate to assess your creditworthiness and repayment capability. Following are the key factors that lenders consider when determining how much personal loan you can get on a ₹45,000 salary:

  • Income Stability

Your monthly salary is a fundamental factor that lenders examine to understand your ability to repay the loan. A higher income generally indicates a greater capacity to handle loan repayments. Lenders prefer applicants with a steady and substantial income as it reduces the risk of default. If you have a stable job with a higher salary, you may qualify for a larger loan amount.

  • Credit Score

Your credit score is an essential metric that reflects your creditworthiness. It is based on your credit history, including your payment history, credit utilization, length of credit history, and any outstanding debts. A higher credit score indicates responsible financial behaviour and reliability in meeting debt obligations. Borrowers with excellent credit scores are more likely to qualify for higher loan amounts and better interest rates, while those with lower scores might face limitations or higher interest rates.

  • Employment History

Lenders assess your employment history to gauge your stability and consistency as a borrower. A longer employment history with the same employer or within the same field suggests reliability, which can positively influence the loan approval process. Frequent job changes or gaps in employment might raise concerns for lenders, potentially impacting the loan amount you can qualify for.

  • Debt-to-Income Ratio (DTI)

The Debt-to-Income ratio is a crucial financial metric that compares your total monthly debt obligations to your monthly income. Lenders use this ratio to assess your ability to manage additional debt responsibly. A lower DTI ratio indicates that you have sufficient disposable income to handle loan repayments, making you a more favourable borrower. Generally, a DTI ratio below 40% is considered healthy, and a lower ratio can increase your chances of qualifying for a larger loan.

  • Other Financial Obligations

Besides your salary, credit score, employment history, and DTI ratio, lenders will also consider any other financial obligations you have. This includes existing loans, credit card balances, mortgages, and other regular payments. If you already have significant financial commitments, lenders may adjust the loan amount to ensure you can comfortably manage your debt load.

Calculating Loan Eligibility on ₹45,000 Salary

Now, let’s explore the potential loan amount you could secure based on a ₹45,000 annual salary.

First, it is important to note that the loan amount you can get on a ₹45,000 salary will vary from one lender to another. Additionally, different lenders have their own underwriting criteria. However, a general rule of thumb is that your total monthly debt obligations, including the new loan, should not exceed a certain percentage of your monthly income, typically around 40% to 50%.

Let us better understand this with an example of how to estimate your potential loan amount:

Step 1: Calculate Your Income

In this case, it is ₹45,000 monthly or ₹5,40,000 annually.

Step 2: Determine Your DTI Ratio

Suppose your monthly debt obligations (including rent/mortgage, existing loans, and credit card payments) amount to ₹18,000.

DTI Ratio = (Monthly Debt Payments ÷ Monthly Income) x 100

DTI Ratio = (₹18,000 ÷ ₹45,000) x 100 = 40%

Step 3: Calculate the Maximum Monthly Loan Payment

To maintain a 40% DTI ratio, your maximum allowable monthly loan payment would be:

₹45,000 x 0.40 = ₹18,000

Step 4: Estimate the Loan Amount

The maximum loan amount can be calculated by considering the interest rate and loan term. Assuming a 10% interest rate and a 3-year term:

Loan Amount = (Maximum Monthly Payment ÷ Monthly Interest Factor) x (1 – (1 + Monthly Interest Factor)^(-Loan Term))

Loan Amount = (₹18,000 ÷ 0.0084) x (1 – (1 + 0.0084)^(-36))

Loan Amount ≈ ₹6,72,857

In this example, with a ₹45,000 monthly salary, a 40% DTI ratio, and the given interest rate and loan term, you might be eligible for a personal loan of approximately ₹6,72,857.

Conclusion

While a ₹45,000 salary may not qualify you for a substantial loan amount compared to higher-income earners, you can still secure a decent personal loan based on your eligibility factors. Remember, the loan amount you qualify for will vary depending on your credit score, existing debts, employment history, and the specific lender’s policies.

Before applying for a personal loan, be sure to assess your financial situation, compare various lenders’ offers, and borrow only what you can comfortably repay. Finnable provides hassle-free personal loans that are easy to apply for and easier to avail of. Our 100% digital application procedures and lightning fast approval times will provide you a seamless personal loan experience.

Amit Arora Finnable

AMIT ARORA

I am a seasoned retail banker with over 21 years of global experience across business, risk and digital. In my last assignment as Global Head Digital Capabilities, I drove the largest change initiative in the bank to deliver the end-to-end digital program with over US$1 billion in planned investment. Prior to that, as COO for Group Retail Products & Digital, I implemented a risk management framework for retail banking across the group.
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