High-salaried individuals may find it easy to obtain personal loans, whereas people with low salaries struggle for loan approvals. If you are hesitating to apply for a loan because of a low salary, don’t worry. A personal loan for low-salary individuals is possible, provided you meet certain eligibility conditions laid down by lenders.
Individuals with low salaries are also eligible for personal loans. Though lenders sanction loans to such borrowers, they do so with certain terms and conditions.
Stable Employment: Personal loans for low-salary individuals are approved by lenders only in cases where borrower has stable employment. Job stability means that despite the loan amount being low or being given out at a high rate of interest, lenders are assured of repayments.
Age: Lenders prefer such borrowers to belong to a certain age group, such as between 21-58 and expect them to pay off the loan as fast as possible.
Debt-to-Income (DTI) Ratio: Low-salary personal loan applicants are expected to have a healthy DTI Ratio (<50%).
No Past Dues: Creditors check borrowers’ credit reports to find out whether they owe any other lender any dues in terms of pending credit card payments, pending personal loan EMIs, or any other fee/charge that went unpaid or unnoticed. Borrowers with low salaries are expected to clear past dues before applying for a new loan.
Borrowers today have many alternatives to traditional bank loans, such as online lenders, peer-to-peer lending platforms, non-banking financial institutions, etc. Here’s how you can look for one:
Check your Eligibility and Select a Personal Loan Plan: Most lending platforms ask for a few details from borrowers with low salaries to create a line of credit. A credit line is the total amount of the loan, and once that is ready, borrowers can choose the loan amount, loan duration, and EMIs.
Upload KYC Documents: Borrowers must then upload a certain set of documents that the app asks for, which will take them a step closer to loan approval and disbursement. KYC Documents generally include PAN Card, Aadhaar Card and voter ID Card.
Get Your Money: The loan amount is then disbursed within a few minutes and credited to the savings bank account for which the borrower has given details while filling out the loan application form on the instant loan app.
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Yes, a low-salary personal loan can be used for different purposes, but lenders ask borrowers to explain why they need the money they are borrowing. Borrowers are free to use the loan proceeds however they see fit, but some lenders might impose certain restrictions. Moreover, the purpose of the loan could impact the loan terms they receive.
A personal loan for a low salary used for prohibited purposes could also result in the lender forcing the borrower to repay the full amount plus interest immediately.
Personal loans with low salaries are approved mostly by instant loan apps. Very few banks and NBFCs are known to approve and disburse personal loans for individuals drawing low salaries.
Most instant personal loan apps expect borrowers to have a minimum monthly salary of Rs. 15,000. Borrowers earning this much as a monthly salary qualify for an instant personal loan.
Yes, but only in some cases. Instant loan apps that have set a minimum monthly salary for borrowers as eligibility criteria are the only ones that will approve a personal loan. Borrowers must check for these apps and only then apply.
Yes, it is possible to get a personal loan against a cash salary. Since a personal loan is a versatile resource that can be used for any purpose, personal or professional, borrowers can avail of one on a cash salary.
Factors such as credit score, existing obligations, monthly income, age, income proof, DTI ratio, etc. affect the eligibility for a personal loan.
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**Disclaimer: The information provided in this webpage does not, and is not intended to, constitute any kind of advice; instead, all the information available here is for general informational purposes only. FPL Technologies Private Limited and the author shall not be responsible for any direct/indirect/damages/loss incurred by the reader for making any decision based on the contents and information. Please consult your advisor before making any decision.
- OneScore , July 25, 2023