Can I Get a Personal Loan on a Low Salary with a Good CIBIL Score?
For salaried individuals, it becomes important to ask the pertinent question of whether the loan sought is feasible with respect to the entire financial profile of the borrower.
Can I Get a Personal Loan on a Low Salary?
Having a smaller salary does not necessarily mean that it would be difficult for someone to borrow a personal loan. But the lender needs to establish the ability of the individual to repay the amount of money he/she borrows without struggling.
A personal loan on low salary could be obtained where the applicant qualifies to apply for such a loan.
This is so because of the nature of a personal loan which is unsecured in most cases. Since there is no collateral involved, the lender focuses on the individual’s financial standing and his/her income.
The salary required to get a personal loan varies from one person to another.
It also differs from one lender to another. There is no fixed salary requirement.
Do You Get a Personal Loan If You Have a Good CIBIL Score?
Not necessarily. Though a high CIBIL score is an important factor in building up a healthy credit profile, there is no guarantee that this alone would ensure your personal loan application gets approved. This is because the CIBIL score alone is not sufficient to get a personal loan approved.
What Lenders May Consider If You Have a Low Salary?
Monthly Salary and Income Stability
The monthly salary is an estimate of your income level and ability to repay the loan.
Lenders may evaluate salary-based details like income proof and salary credits based on their procedures. Income stability and security may matter in evaluating whether you can afford an extra EMI.
Present EMIs and Unpaid Debts
Existing financial obligations can greatly influence loan affordability.
For instance, an individual earning a low monthly salary but repaying several EMIs is likely to have more disposable income compared to another individual with the same monthly salary and no EMIs.
This is the reason behind the fact that personal loan eligibility for salaried individuals cannot be established using the salary only.
Job Stability
Job stability may also be considered when making an appraisal by the bank. There may be specific needs from some banks concerning the nature of jobs held or the income-credit ratio.
They are specific lender issues and not generic.
CIBIL Score and Credit History
CIBIL score and credit history give an indication of how you have managed previous credit arrangements. Making repayments on time for current credit products will ensure better credit standing.
CIBIL makes it clear that the score depends on the individual's credit history and is used in the loan appraisals.
A good score is not, however, an automatic approval indicator.
Amount of Loan Applied For
The amount of loan applied for is significant because it determines the amount to repay.
If the loan amount is low, the EMI will be lower, although it does not necessarily mean that the loan will be approved. The amount of the loan applied for should be consistent with the assessment of the borrower's capability and eligibility.
Loan Duration and EMI
Duration determines how big the monthly EMI will be, and at what cost the loan will be availed.
In some cases, the loan duration can be extended to bring down the monthly EMI. However, the loan duration could end up increasing the total interest on the loan.
How Much Personal Loan Can You Get on a Low Salary?
There is “no single loan amount that is applicable for all borrowers with low salary.”
The loan amount a lender may sanction depends upon:
* Monthly income
* EMIs outstanding
* Employment profile
* Credit profile
* Loan amount asked for
* Tenure of loan
* Repayment ability
* Lender policy
For instance, take the case of two salaried individuals who earn the same monthly salary. While one may have large existing EMIs, the other may not have many. This means that there will be a difference in their eligibility despite both having the same salary.
Even for a salary of ₹25,000 per month, the loan amount an individual qualifies for cannot be estimated simply on the basis of his salary.
Do not use calculators or other sources that give you a particular loan amount as eligibility without considering other factors such as those mentioned above.
High CIBIL score but low salary, what can you do before taking the loan?
Before taking the loan for salaried people, here are things you must do:
Check your credit report
Get a copy of your credit report and go through it to get information on your standing in terms of your credit score.
Check existing EMIs
Make a note of how much money you are putting towards paying off your loans.
Check your proposed EMI
Prepare your monthly budget including all expenses and the EMI.
Steer Clear of Multiple Applications
Applying for many loans in quick succession might create many credit inquiries. Refrain from indiscriminate applications just to know who will approve the loan.
Conclusion
A good CIBIL score is certainly useful when going for a personal loan, it does not substitute the necessity of proving adequate repayment ability. In case your salary is not very high, the lenders will try to evaluate your income reliability, EMIs, employment history, amount of loan being applied for, and other relevant parameters of eligibility.
In case you want to apply for a personal loan for salaried individual, first estimate the necessary loan amount and the feasibility of paying off the suggested EMI. Check your CIBIL score, evaluate your current liabilities and compare the total costs of borrowing the money.
FAQs
1. Is it possible to take a personal loan with high CIBIL score but low salary?
It depends upon the lender's requirements. High CIBIL score may work in favor of your credit profile, but other factors like salary, existing EMIs, occupation, documentation, amount required and capability to repay also matter.
2. Is it possible for salaried individuals to take personal loans despite low salaries?
Maybe. Eligibility will depend upon the lender's requirements as well as other aspects of the financial profile of the applicant. Being on a low salary doesn't always mean denial of personal loan.
3. Can multiple personal loan applications affect CIBIL score?
Multiple loan applications could lead to multiple hard inquiries being reflected in your credit score. Applying in a selective manner would be advisable.
Disclaimer
The above article has been written for purely educational and informational purposes and is not meant to serve as financial, legal or lending advice. Personal-loan eligibility, interest rate, amount of loan, period, fee and other terms are determined by the respective lender and are subject to change.
