Know How Much Personal Loan Are You Eligible for Based on Your Income

Know How Much Personal Loan Are You Eligible for Based on Your Income


Personal loans are one of the most preferred financing tools for handling a financial crunch. These loans are very easy to avail. With the best loan apps, you can simply download the app, fill in the necessary details and apply for a loan within minutes. You can also apply for an online loan or go the conventional way and visit the lender’s branch. There are different ways to avail a personal loan today. However, the most important thing in all of these is to know your loan amount eligibility.

The best loan apps can offer you quick loans of up to 1.5 lakhs. While banks and some NBFCs may offer up to Rs. 1 crore. However, the total loan amount that the lender will be sanctioning depends on several parameters. The most important of which is your income.

Read on to know how much personal loan you are eligible for based on your income.

Understanding Your Salary

Typically, salaries are expressed as either gross or net (also known as in-hand salary). It is crucial to understand the distinction between gross and net. Most financial institutions consider the net component of your pay to calculate your loan amount eligibility. Although salary structures vary from organisation to organisation, the following elements are generally included:

Basic Salary + Allowances such as Leave Travel Allowance (LTA), Medical Allowance, House Rent Allowance (HRA), Other Allowances, etc.

The aforementioned components make up the gross part of the wage. However, some required deductions from the gross total, such as deductions for the Employee Provident Fund (EPF), Tax Deduction at Source (TDS), Professional Tax, etc., reduce the final amount the employee receives as pay. The sum left over is referred to as the employee’s net wage or take-home pay. The eligibility for a loan is determined based on your in-hand salary.

How to Calculate the Amount of a Personal Loan based on your salary

When determining your eligibility for a personal online loan, lenders typically use the multiplier technique, the EMI/NMI ratio, or a combination of both.

Multiplier method

Many lenders use the multiplier approach for determining your eligibility for a personal loan. The personal loan amount is established using this method based on a specified multiple of the applicant’s net monthly income. Depending on the lender and monthly payment, the multiple might be anywhere from 10 to 24 times the applicant’s monthly salary.

What is an EMI/NMI Ratio?

The EMI/NMI ratio is the percentage of your net monthly income (NMI) used to pay both your current EMIs and the new loan. Lenders often favour approving personal loans for candidates with EMI/NMI ratios of up to 50–55%.

Your duration, interest rate, and net monthly income influence your EMI/NMI ratio. To enhance your eligibility for a greater personal loan amount, you can either extend the loan term or repay your previous loans.

Calculator for Personal Loan Eligibility

A personal loan doesn’t need collateral because it’s an unsecured loan. The lenders assess the eligibility of the applicants based on their age, reputation, income, and other similar variables.

The lender may approve or deny a loan application based on these criteria. Usually, the best loan app provides a calculator to help you calculate your loan eligibility. Complete the required fields and the loan calculator will tell you the amount you are eligible for.

Personal Loan Eligibility

While different lenders have varied qualifying requirements, the following are common to all banks and financial institutions:

  • Age: 23 to 60 years of age (This differs from lender to lender).
  • Work experience: two years minimum, with one year in the same organisation.
  • Loan term: one year to seven years.
  • Profession: salaried or self-employed.
  • Income: Minimum Rs. 15,000 (This differs from lender to lender).
  • Nationality: Indian.


An unsecured loan known as a personal loan is one that the lender approves after considering your income and expenses. Most lendersoffer these loans to individuals with a monthly income of Rs. 15,000 or more. However, this minimum salary requirement differs from lender to lender and borrower to borrower. It also depends on your city of residence.

But the higher your salary, the higher your loan amount eligibility. In most cases, your loan amount eligibility will be a multiplier of your salary minus your obligations. You can use an online calculator to find your loan eligibility and always apply for a loan that’s within this eligibility limit.