Personal loans are unsecured loans; this means that these loans unlike a home or an auto loan have no asset backing it. This makes these loans riskier for the lender as they have no collateral to fall back on in case the borrower defaults. Owing to this factor personal loan are available at much higher interest rates than compared to other loans. These loans can be taken for a variety of reasons which are also fairly simple to procure.
The basic tenets of deciding who can or cannot get a loan remain similar across lenders with a few minor differences across lenders or across loans. So what are the eligibility factors for taking a personal loan?
While there are many factors that decide whether you can get a loan or not; the quantum of the loan that you get is directly linked to your income whether in the form of salary or profit from your own business or practice. Different lenders may set different limits for this.
For example, for an ICICI personal loan the applicant must of a minimum net of Rs. 17,500 monthly salary for non-metros and for metros Rs. 25,000 for getting a loan sanctioned. For the self employed this limit is a minimum profit after tax; for proprietorship firms it is Rs. 200,000 and for non-professionals it is Rs. 100,000.
On the other hand, Tata Capitals has different criteria. As per their website, for a salaried individual with a minimum income of Rs. 20,000 the loan eligibility is Rs. 15, 00,000; for self employed individuals with a minimum income of Rs. 200,000 annum the loan eligibility is Rs. 20,00,000 and for a business person it 15,00,000 if the minimum income is Rs. 200,000.
Lenders usually use a thumb rule when they want to ascertain how much personal loan can be sanctioned for an individual. The rule is that the applicant must have sufficient monthly inflow to service their EMIs. This will include the EMI for the loan that you are applying for and also any other loan EMIs you may have. The total of all EMIs should be less that 50% of your take home income.
Most lender websites have a calculator which allows you to calculate your loan eligibility by keying a few basic details. In case the applicant finds that his/her income is not sufficient to get a loan serviced they could opt to apply for a joint loan where they club the income of a spouse or a parent to boost their eligibility criteria income wise.
At the end it is important to remember that irrespective of the how many loan one can get, a loan should be taken only after careful consideration of its utility and requirement. Even if the eligibility is higher one should take only what they require and not anymore!