Lenders generally evaluate your credit history and monthly income to determine whether you have the means to repay a Personal Loan. However, lenders may reject your loan application if your salary is low. So what exactly is the impact of a low salary on your Personal Loan eligibility? And what is the minimum salary required for Personal Loan? How can you enhance your loan eligibility despite a low salary? Read on to get all these answers.
Impact of low salary on your Personal Loan eligibility
While the Personal Loan minimum salary requirement is set by most lenders at around ₹25,000 on a monthly basis, after all the applicable deductions, if your salary is lower than this amount, lenders may reject your loan application. A rejected loan application also impacts your credit score, which is equally crucial while acquiring loans. Lower credit scores further influence other lenders to reject your loan applications, putting you in an infinite loop of lower credit scores and loan rejections. However, you can get out of your predicament by following these simple tips.
Tips to improve eligibility
If your salary is lower than the minimum salary required for Personal Loan, you can use these tips to enhance your eligibility.
- Show your income from your investments
Your income from various investments can serve as proof of additional income and be used to enhance your eligibility, thereby getting you over the minimum salary required for Personal Loan. For instance, if you have Fixed Deposits (cumulative or non-cumulative), you can calculate the annual income from them and divide the amount by 12 to increase your monthly income. Similarly, if you earn dividends from shares or mutual funds, you can also show this income. - Show income from variable pay
If you cannot fulfil the Personal Loan minimum salary requirement, you can always calculate the monthly or quarterly incentives, the variable pay, the annual bonus, and other forms of variable income to enhance your eligibility. You also have the option to show income from your passive income sources and hobbies to meet the minimum salary required for Personal Loan. - Fulfil other eligibility criteria requirements set by the lender
In case you fall short of the minimum income for Personal Loan or the minimum salary for a loan requirement as set by the lender, you need to ensure you fulfil their other eligibility requirements. For instance, you must consistently maintain an excellent credit score of 750+ points. You must also repay your credit card dues on time and in full to improve your chances of acquiring loans. Similarly, you must not utilise more than 30% of your credit limit, stay employed with a reputed organisation for over two consecutive years, and show proof of investments. These factors may convince your lender to revaluate your loan application even if you cannot show the minimum salary required for Personal Loan.
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*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Personal Loan at the sole discretion of HDFC Bank limited. Loan disbursal is subject to documentation and verification as per Banks requirement.