How much loan can a salaried person get

How much loan can the salaried borrower get: How much loan can I get? Such questions are common when you think of taking a loan. Let us see how banks see the salary taker and how much loan can be given.

loan eligibility

One of the important eligibility criteria for any loan is the take-home pay factor. Let us understand what happens at take-home?

Check your salary slip carefully. You see ‘Gross Pay’ and ‘Net Pay’. Banks look at the net salary figure while calculating loan eligibility. Net salary is the amount that you take home after deducting various loan installments, statutory payments, insurance premiums etc. Several components of your pay slip are of variable type. Some things like leave travel allowance and medical allowance are also included in your salary. Most of the banks do not consider these allowances while computing the net salary for the loan. This is the reason why many banks ask for the salary slips of the last three months. This helps them arrive at an average net salary.

take-home pay concept

Various types of loans are taken like home loan, personal loan, credit card loan etc. These loans are repaid from your net salary. Therefore, banks will have to account for these payments when you reach your eligibility level. After paying these loan installments, you have the net take-home pay that you are left with. Generally, banks allow up to 60 times your net take-home pay as the maximum eligibility for your home loan. This figure is very less for a personal loan. It depends from bank to bank. Some banks allow up to 12 times your net take-home pay.

things to note

When the bank processes your loan application, it has to ensure that you can repay the loan comfortably. Hence, they stipulate certain conditions that the sum total of all EMIs should not exceed 50% of the net salary. Your loan eligibility depends on this amount. So, when you apply for a personal loan, the banks calculate the eligibility in the following way:-

  • 12 times your net monthly salary
  • Maximum admissible amount subject to availability of EMI for longest tenure

The following example will make things clear:

Net Monthly Salary = 50,000

Maximum amount as per bank loan product = 5 lakhs

The interest rate is 14%, and the maximum tenure is 60 months

You are paying certain EMIs like Rs.4,000 for personal loan and Rs.12,000 for your home loan

Now, banks require 50% of the minimum net salary for personal loan after accounting of all loan installments. Hence, the total amount of all your EMIs on the Personal Loan offered should not exceed Rs 25,000. You are already paying Rs.4,000 + Rs.12,000 so the bank has a leverage of Rs.9,000. They calculate your personal loan eligibility keeping this in mind, so you can now get a loan of up to 9,000 possible EMIs.

Banks approve the lowest of the following three counts:

  • Net Salary X 12 = 6 Lakhs
  • Product wise maximum loan amount = 5 lakhs
  • Maximum loan amount = 3.85 lakhs depending on your capacity

In such a situation, the bank will give you 3.85 lakhs. Eligibility may vary from loan to loan.

When it comes to home loans, banks offer more loans as most of the banks set the take-home pay percentage between 35% to 40%. Hence, when you apply for a home loan, your eligibility increases as compared to a personal loan.

Many other factors also play a role in determining your eligibility. They include the following:-

  • Your age
  • the nature of your employment or business
  • Your employer’s category
  • your credit score

How much loan can the salaried borrower get?

It depends on your net salary. You need to remember one fundamental aspect of a pre-approved loan offer. There will be a difference between a pre-approved home loan and an actual home loan. Banks may not have all the necessary information while providing a pre-approved home loan. So you must be careful while looking for a new home based on your pre-approved home loan approval letter. The final amount may vary which will force you to spend extra.

While applying online for Credit Card, Personal Loan and Home Loan, one can get all the information in English at BankLoanMarket.com.

BankLoanMarket.com.com

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