Are you planning to take a personal loan in 2025 but unsure how much loan amount you’re eligible for? Understanding your personal loan eligibility is the first and most important step before applying. This detailed guide will help you know exactly how lenders determine your eligibility — and how you can calculate it yourself.
What is Personal Loan Eligibility?
Personal loan eligibility refers to the criteria set by banks or NBFCs (Non-Banking Financial Companies) to determine if you qualify for a loan. It includes factors like your age, income, employment type, credit score, and more.
Key Factors That Affect Personal Loan Eligibility
To calculate your personal loan eligibility, these are the main factors lenders consider:
1. Monthly Income
Higher income improves your chances of getting a bigger loan. Generally, salaried individuals with a monthly income of ₹25,000 or above are eligible.
2. Existing EMI Obligations
If you’re already paying EMIs, it will reduce your loan eligibility. The Debt-to-Income Ratio (DTI) must ideally be below 40%.
3. Credit Score
A credit score above 750 is considered good. A high score means better chances of loan approval with low interest rates.
4. Employment Type
Whether you are salaried or self-employed, your job stability and organization reputation impact eligibility.
5. Age
Generally, individuals between 21 to 60 years are eligible. Age affects loan tenure and amount.
How to Calculate Personal Loan Eligibility?
There are two main methods banks use:
1. Multiplier Method
Your monthly income is multiplied by a factor (typically between 15 to 30) based on your profile.
Formula:
Eligible Loan Amount = Monthly Salary × Eligibility Multiplier
Example:
Monthly Income = ₹40,000
Multiplier = 20
Loan Eligibility = ₹40,000 × 20 = ₹8,00,000
2. FOIR (Fixed Obligations to Income Ratio) Method
This method deducts all your current EMIs from your income and calculates how much EMI you can afford.
Formula:
Eligible EMI = (Monthly Income × FOIR%) – Existing EMIs
Loan Amount = Eligible EMI × Loan Tenure × Interest Factor
Example:
- Monthly Income = ₹50,000
- FOIR = 50%
- Existing EMI = ₹5,000
- Tenure = 5 years (60 months)
- Interest Factor = 20.05 (depends on interest rate)
Eligible EMI = ₹25,000 – ₹5,000 = ₹20,000
Loan Amount = ₹20,000 × 60 = ₹12,00,000 (approx)
Tips to Improve Your Loan Eligibility
✔️ Maintain a credit score above 750
✔️ Repay existing loans and credit card dues
✔️ Opt for a longer tenure to reduce EMIs
✔️ Apply with a co-applicant to enhance eligibility
✔️ Show additional income sources (rent, freelancing, etc.)
Use Online Personal Loan Eligibility Calculators
Most banks and financial institutions provide free loan eligibility calculators on their websites. You can enter your income, EMI, age, and other details to get an instant estimate.
Final Thoughts
Calculating your personal loan eligibility helps you plan better, avoid rejections, and choose the right lender. Always compare multiple banks, check your credit score in advance, and ensure you’re financially ready before applying.
FAQs on Personal Loan Eligibility
What is the minimum salary required for a personal loan?
Most lenders require a minimum monthly income of ₹25,000 for salaried individuals.
Can I get a personal loan with a low credit score?
It’s possible, but the loan amount will be lower and interest rate higher. Improving your credit score helps.
Is co-applicant allowed for personal loans?
Yes, adding a co-applicant like your spouse or parent can improve your loan eligibility.
Still unsure about your loan eligibility? Use online tools or consult with your preferred bank to get accurate calculations based on your profile.
