What is the Maximum Personal Loan Amount in India?



Personal loans offer you substantial amounts of finances that you can use for whatever purpose you desire, be it an overseas vacation, your child’s education or a down payment for a property. The amount that you obtain from a bank or a personal loan company depends largely upon your lender’s internal policies and your loan repayment potential. Read on the factors responsible for a high-value personal loan. 

Ideal creditworthiness displayed by your credit score

One of the main factors influencing the personal loan amount you obtain is your credit score. It is a 3-digit number that normally ranges between 300 and 900. It aggregates your past repayment history and creditworthiness and gives the lender an indicator of whether you will repay the loan in a timely manner. While a credit score of 750 suffices for most personal loans, a higher score can secure you a larger loan amount on affordable terms. 

Eligibility according to age and employment stability

Apart from your credit score, two other personal loan eligibility criteria that impact your loan amount are your age and employment status. Lenders generally require you to be between 23 and 55 years of age as these are employment years and ensure that you are earning a regular monthly income.

Your job stability is also of utmost importance as a well-balanced career progression shows that you will have guaranteed and increasing financial inflow. The higher your income and the more favorable your employment status, the higher the loan amount you can obtain. However, if you are wondering how much loan you can get if your salary is Rs.15,000, there are financial lenders such as Bajaj Finserv, who offer personal loans for low salary income.

A low debt-to-income ratio 

In case you are thinking about how many personal loans you can take out at once, keep in mind your debt-to-income ratio. Before approving your loan application, your preferred lender will want to know about the existing debt you are servicing. The idea here is that the higher the existing amount of debt, be it car loan EMIs, home loan EMIs, or credit card dues, the lesser is the amount you can dedicate towards personal loan EMI payments. Keeping your total borrowed credit ratio below 30% will give you a better chance of getting a large loan amount.

Now that you know the main factors that influence the personal loan amount, take a look at two common methods that lenders make use of in order to determine the final loan amount.

Multiplier method

The multiplier method utilizes a simple formula to deduce the maximum loan amount you are eligible for. Here, your net take-home salary is multiplied by a number normally ranging from 9 to 18. This number is decided based upon factors like your present income and job profile.

In short, the formula reads as follows:

  • Loan amount = Net salary x (a number from 9 to 18)

If your net salary is Rs.15,000 and the multiplier is 10, then the maximum loan amount you are eligible for an amount to Rs.1.5 lakh. On the other hand, if your net income is Rs.30,000 and the multiplier is 12, then you are eligible for an amount of Rs.3.6 lakh.

FOIR (Fixed Obligation Income Ratio) method

This method judges your repayment abilities based upon the portion of your salary that remains after factoring in the costs of fixed and regular expenditures. Generally, this ratio should not exceed 50%. The logic here is that if you set aside approximately 50% towards living expenses then you only have 50% left to service the remaining debt. Ideally, lower the FOIR, higher the chances of getting a substantial loan. The FOIR formula reads as follows:

  • FOIR = (Sum of existing obligations/ Net salary) x 100

Consider that you have a net monthly income of Rs. 25,000 and pay Rs. 4,000 towards car loan EMIs and Rs.2,000 towards educational loan EMIs. Your FOIR becomes (Rs.6,000/ Rs.25,000) x 100 = 24%.

Your financier now knows that you can dedicate the remaining 26% towards personal loan EMIs and hence will be comfortable with giving you a loan. However, if your income is higher, you can get an enhanced loan amount as your FOIR will further reduce. For instance, if you earn Rs.30,000 per month instead of Rs.25,000, your FOIR becomes (Rs.6,000/Rs.30,000) x 100 = 20%.

Now that you know how lenders calculate the personal loan amount, choose a top financial solution like a personal loan from Bajaj Finserv. Here, you get finances up to Rs.25 lakh that you can repay between 12 to 60 months at affordable interest rates and on flexible terms. Bajaj Finserv Flexi Loan allows you to borrow in portions from your approved sanction and pay interest only on the amount withdrawn. Further, you can make part-prepayments at nil charges!

When it comes to repayment, the Flexi loan feature allows you to bring down your EMIs by up to 45% by paying interest-only EMIs through the term and paying principal at the end of the tenor. Whether you want to calculate personal loan EMIs or know the foreclosure fees, you get all the insights you desire when you use Bajaj Finserv’s exclusive range of calculators, such as the EMI calculator, Flexi loan EMI calculator, or the prepayment calculator. 

One of the main advantages of a Bajaj Finserv Personal Loan is that you not only get access to substantial financing, but the funds also get disbursed to your bank within 24 hours of your application getting approved. This way you can address urgent financial needs with ease. To expedite this process further, check your pre-approved personal loan offer. A single-step verification will give you instant approval and a chance to apply via deals customized for you.