Personal loans serve as an easy way to fund your sudden or urgent expenses like a wedding or a home renovation. As personal loans tend to be unsecured, most non-banking and banking organizations tend to be more cautious toward assessing the borrower’s eligibility to ensure that there is no default.
While analyzing the personal loan eligibility for 60,000 salary or other values, lenders usually leverage a specific number of metrics, including credit score, monthly income, and existing loans, to understand the borrower’s eligibility. Lenders usually analyze your existing income to approve a personal loan application to minimize the chances of a default. Most NBFCs or banks might reject your personal loan application if you have a low income or if your income is headed toward other major loans.
How does a bank or lender decide how much loan to be sanctioned to an individual with a 60k salary? Let us find out!
What is a Personal Loan and Why is It Popular?
A personal loan is a type of unsecured loan offered by banks or financial institutions. It permits borrowers to access funds for different purposes, including home improvements, medical bills, debt consolidation, or other unpredictable expenses. Such loans are usually provided with a fixed interest rate and repayment period.
Key Criteria for Loan Eligibility on 60,000 Salary
When you apply for a personal loan on a 60,000 salary, lenders usually assess your eligibility depending on several factors. Some factors to consider are:
- A decent credit score (typically above 700) is recommended to secure the personal loan on a 60k salary and get lucrative interest rates.
- A valid history of timely loan repayments depicts your overall credit worthiness.
- Lenders also calculate the debt-to-income ratio by dividing the monthly debt payments by the gross monthly income. A lower debt-to-income (DTI) ratio depicts increased chances of personal loan approval.
How Much Personal Loan Can I Get on 60,000 Salary?
In India, lenders or banks typically use the FOIR or Fixed Obligation to Income Ratio parameter to assess the maximum loan amount you might be eligible for, especially when you have a 60k salary. FOIR depicts the proportion of income that is extended toward fixed obligations.
EMI Calculation for Personal Loans with a 60,000 Salary
As per the general rule, lenders usually impose a cap of 40 per cent to 50 per cent on the FOIR. Here is how you can estimate the EMI on a personal loan on a 60k salary:
In case the FOIR is 40 per cent:
Monthly income: INR 60,000
Apply the formula: 60,000 X 0.40 = 24,000
Therefore, INR 24,000 is the maximum EMI amount you can afford, depending on the FOIR of 40 per cent.
Therefore, the approximate loan amount you can apply for on your 60k monthly salary, considering the FOIR of 40 percent and a 12-percent interest rate along with a loan tenure of 5 years, the approximate loan amount is INR 1,063, 731.69.
Impact of Credit Score on Loan Amount of 60,000 Salary
The credit score of a borrower significantly impacts the loan amount on a salary of INR 60,000. Lenders believe that a higher credit score is a sign of responsible financial behavior. This makes you a highly attractive borrower.
A decent credit score (usually above 700) can improve your chances of getting a personal loan on a salary of 60k at lucrative interest rates. Lenders will trust you with a higher loan amount when you boast a good credit score and cibil score .
Benefits of Getting a Personal Loan on a 60,000 Salary
When you have a monthly salary of 60k, you can apply for a personal loan to fulfil diverse financial needs. This could include medical emergencies, home renovations, funding personal goals, or debt consolidation.
Personal loans offer the flexibility of unsecured credit. In turn, this allows you to borrow the loan amount without portraying any collateral. Usually, they are made available with competitive interest rates and flexible repayment loan terms.
Risks of Taking a Personal Loan with a 60,000 Salary
When you have a monthly salary of 60k, you can apply for a personal loan. However, it could come with certain risks. When you take on debts on your limited finances, it could cause complications, especially when you are not able to repay the loan amount. Moreover, high interest rates can increase the borrowing cost to a greater extent.
Strategies to Maximize Your Personal Loan Eligibility
Improve Your Credit Score: While deciding on personal loan eligibility, the credit score is a major determinant. You should maintain a decent credit score by ensuring timely repayments, avoiding defaults, and minimizing debt.
Improve Your Income: When you depict a higher income, it will affect your loan amount significantly. A higher loan amount will deliver confidence to lenders with respect to your repayment capabilities.
Minimize Existing Debt: Lenders will go through your DTI or Debt-to-Income ratio while determining the loan eligibility. When you minimize your existing debts, it will improve your borrowing capacity.
When to Consider Alternatives to Personal Loans
You can consider alternatives to personal loans when you have a high credit score and are able to get access to low-interest loan options. For instance, credit cards featuring a 0 per cent APR introductory period are also beneficial for your short-term funding needs. As a homeowner, you can go through options like lines of credit or equity loans. Still, it is recommended to analyze your overall risks before considering alternatives.
Tips for Managing a Personal Loan Effectively
If you wish to manage personal loans effectively, you should undertake proper planning and ensure disciplined repayment. Strive to follow a budget prioritizing payments. Ensure timely payments to minimize the chances of late fees and penalties.
Conclusion
With a monthly income of Rs 60,000, you can typically secure a decent personal loan amount, provided you have a decent credit score and not too much existing debt. Lenders, including platforms like Stashfin, will assess your eligibility based on factors like your credit score, debt-to-income ratio, employment stability, and repayment history
Frequently Asked Question
Does the Tenure Affect My Loan Amount?
Yes. The tenure will affect your loan amount. For instance, a longer tenure will imply lower monthly instalments and higher total interest.
What is the Ideal EMI for a ₹60,000 Salary?
The ideal EMI for a personal loan on a 60k salary would depend on factors like the loan amount, loan tenure, interest rate, and existing debts.
Can I Use My ₹60,000 Salary Loan for a Business Start-Up?
While personal loans tend to be unsecured, some lenders might allow you to use them for business purposes. However, it is recommended to check with your lender and consider business loans accordingly.
How Does My Salary Influence My Personal Loan Eligibility?
Your salary is a major factor in determining your personal loan eligibility. A higher salary will increase your borrowing capacity. Moreover, a stable income is also crucial.