How to Calculate Personal Loan Based on Your Salary

How to Calculate Personal Loan Based on Your Salary

Lender provides personal loans starting range of Rs. 50,000 to Rs. 40 lakh. However, banks will calculate various factors like monthly income, expenses, and other eligibility criteria. Generally, a personal loan is an unsecured loan. Bank offering the loan without taking security from the borrower.

Borrower salary is an important factor when taking a personal loan. 24hr Loan explains how to calculate personal loans based on your salary.

Techniques for Calculating the Personal Loan Amount

To determine personal loan eligibility, Banks/NBFC companies use different methods like debt-to-income ratio, multiplier method, and net monthly income ratio (NMI). These methods are discussed below:

Debt-to-Income Ratio (DTI)

Lenders use DTI (Debt-to-Income) calculation to check your repayment ability. DTI calculations show your financial health. The lender understands the borrower’s monthly debt and other expenses from net monthly salary.

Multiplied Method

Lenders use other techniques to determine personal loan eligibility that as the multiplier method. The borrower’s net income is multiplied by 10 to 28 times to receive the maximum loan amount. Let’s example you are getting Rs. 20,000 in–hand salary. So, a multiple of 25 (20,000 X 25) is Rs. 5 lakh. If you don’t have any running loans, you may obtain a Rs. 5 lakh loan.

This calculation depends on the lender. Financial institutes use their own calculated multiplier method to check borrower loan eligibility.

Loan Amount Based on Multiplier Method

Monthly Net SalaryLoan Amount
Rs. 12,000 SalaryRs. 1.20 Lakh
Rs. 13,000 SalaryRs. 1.30 Lakh
Rs. 14,000 SalaryRs. 1.40 Lakh
Rs. 15,000 SalaryRs. 1.50 Lakh
Rs. 16,000 SalaryRs. 1.60 Lakh
Rs. 17,000 SalaryRs. 1.70 Lakh
Rs. 20,000 SalaryRs. 2.00 Lakh
Rs. 25,000 SalaryRs. 2.50 Lakh
Rs. 27,000 SalaryRs. 2.70 Lakh
Rs. 30,000 SalaryRs. 3.00 Lakh
We use 10 times of Net Monthly Income to generate the loan amount. But it will change based on lender calculation. Some lender calculates 15 times of NMI (Net Monthly Income) to provide the loan amount.

Also Read: Personal Loan Disbursement Process

Monthly Income Ratio

The financial company will determine net monthly income which is lower from gross salary. If the borrower’s gross salary is Rs. 20,000, net income will lower after deduction which may be Rs. 17,200. So, the lender will calculate on net salary that is Rs. 17,200.

Higher-income earners must be eligible for the maximum loan amount. But the DTI ratio is also an important factor.

Eligibility Criteria for Salaried Person

Obtaining a personal loan from 24hr Loan is affordable. Meet the eligibility details to get a loan for a salaried person:

  • Indian Residence
  • Monthly Net Salary: Rs. 12,000 or above
  • Total job experience must be 12 months
  • Applicant Age under 21 to 55 years
  • Maintain Credit Score: -1 or 700+

Required Documents to Obtain Personal Loan

Salaried persons obtain personal loans with hassle-free documents. Submit all the following documents listed at loan process time:

  • Aadhaar Card
  • Pan Card
  • Latest month’s salary slip
  • 12 months bank statement
  • Residential documents: Gas bill / Utility bill
  • Other documents if need

Compare Interest Rate of Banks / NBFCs

LendersRate of Interest (p.a.)Monthly Income 
WeRize 1.35% per monthRs. 12,000Apply Now
MoneyView 1.33% per monthRs. 13,500Apply Now
InCred   11.49% to 18% p.a.Rs. 15,000Apply Now
Fibe 24% to 30% p.a.Rs. 15,000Apply Now
Finnable 16% to 22% p.a.Rs. 15,000Apply Now
SBI Xpress Credit 11.50% to 14.50% p.a.Rs. 15,000Apply Now
IDFC   12.50% to 18% p.a.Rs. 15,000Apply Now
PaySense   1.4% to 2.3% per monthRs. 18,000Apply Now
Upward  9% to 32% p.a.Rs. 18,000Apply Now
Faircent12% to 28% p.a.Rs. 25,000Apply Now
Credit Saison14% to 24% p.a.Rs. 25,000Apply Now

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