Whether a planned or unforeseen expenditure, a Personal Loan meets all your financial requirements. Personal Loans are unsecured credit. This means you need not pledge your assets as collateral to secure the Loan amount. Apply for Loans at competitive interest rates and flexible repayment tenure. These factors collectively make Personal Loans a good financing option for salaried individuals.
You can apply for a Personal Loan for salaried online within minutes. Before you start, you should know the factors influencing the Loan approval. The bank primarily checks your credit score, repayment history, and salary for Loan approval. Let us understand how your salary and work profile impact the Loan approval.
Income influence
From qualifying for the eligibility criteria to Loan approval, your salary has a significant say over your Personal Loan application. To apply for a Personal Loan, you need to be a minimum of 22 years and a maximum of 60 years. Both salaried and self-employed applicants can apply for this Loan. You need a monthly income of at least Rs. 20,000. Your salary helps the bank determine your repayment capacity.
A higher in-hand salary translates to a better repayment capacity. Given your high salary, you have a significant amount in hand. This makes the bank confident that you can repay the applied Loan amount without defaults. Banks even readily offer pre-approved Personal Loan to applicants with a good salary. Your income determines the maximum Loan amount you can apply for.
With a higher salary, you can request a higher amount. The bank approves such a request as they are aware of the repayment capacity you hold. Your income influences Personal Loan interest rate too. When you portray a solid repayment capacity, the risk associated with your Loan request is significantly low. Due to this, the bank might offer a Loan at a lower interest rate. You also get a free hand in choosing a flexible repayment tenure.
Debt to income ratio
Now, you may think you have a reasonable income, and there is no way the bank will reject your Loan request. The bank still compares the salary with your debt obligations. This is called the debt-to-income ratio. A higher debt-to-income ratio negatively impacts your repayment capacity and overall profile. A debt-to-income ratio of 40:60 is considered reasonable. This way, you get a chunk of your salary to make other repayments.
This also ensures a considerable burden is off your shoulders. Think wisely before applying for a Personal Loan. You can now apply for one through a Banking app. Download the bank’s mobile app and apply for the Loan instantly.
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