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Personal Loan Eligibility Calculator

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A personal loan can be defined as an unsecured loan that can be availed to meet a number of end-use requirements and comes with little to no restrictions. Since it is not a guaranteed loan, the lenders face a higher risk factor as compared to other secured loan products. This means, there are numerous factors and parameters that banks and financial institutions consider before determining the applicant’s loan eligibility. With the Urban Money Personal Loan Eligibility Calculator you can understand your eligibility for a loan depending on your income and repayment capacity. This powerful AI-backed calculator considers several factors like credit history, income, employer, existing financial liabilities, etc to bring you the best loan offers suited to your needs.

Personal Loan Eligibility Calculation Formula

Different lenders and loan providers calculate your personal loan eligibility based on differing factors. Given below are the two most common methods used to calculate an applicant’s personal loan eligibility:

Method 1: Multiplier Formula

The personal loan eligibility is calculated in this method by using a simple mathematical formula:

Personal Loan Eligibility = (Applicant’s Salary) x (number between 9 and 18)

Banks and other financial institutions assign every applicant a multiplier number that ranges from 9 to 18. This number is a rating that reflects your credit profile, income, and the company you work at.

Method 2: Fixed Obligation to Income Ratio

This method is usually used by lenders to gauge the applicant’s repayment ability. They take into consideration any of your previous fixed obligations like EMIs, and deduct it from your monthly income. Given below is the formula to calculate eligibility based on this method:

FOIR = (Total Existing Obligations/Monthly Salary) x 100

Let’s take a look at an example to understand this concept a little better:

Suppose your monthly income is Rs. 70,000, and you have existing liabilities like:

  • Personal loan monthly payments of Rs. 6,000.
  • Car loan monthly payments of Rs. 9,000.

To calculate the repayment ability of the applicant, lenders consider that they can only use 50% of their income towards repayment of debt. So in this scenario, the amount considered will be Rs. 35,000.

Total Debts = 9000 + 6000 = Rs. 15,000

Disposable income for new loan = 50% of monthly income - total existing liabilities = Rs. 35,000 - Rs. 15,000 = Rs. 20,000 FOIR = (15,000/70,000) * 100 = 21%

In such cases, if the EMI for the new loan exceeds Rs. 20,000 per month even for the longest tenure, your loan application will not be approved. But if the new loan EMI is less than Rs. 20,000, your application will get approved.

How to Use Urban Money Personal Loan Eligibility Calculator

The Urban Money personal loan eligibility calculator is a simple and powerful AI-backed tool that provides an instant estimate for your personal loan eligibility. Given below is how you can use this convenient online tool.

  • Select your location.
  • Enter the applicant’s age. The applicant should be at least 21 years old with a maximum age of 65 years upon loan maturity.
  • Enter your net monthly income/ annual profit after tax deduction. Both these amounts have to be mentioned after tax deduction.
  • Enter your monthly EMI obligations. This should be a total of all the existing EMIs, including any credit card outstanding.

You will then be able to view all the personal loan offers that you are eligible for. You can set the loan tenure and interest rate as per your preference.

Note: This calculation is based on information entered by you and is meant to give you an indication of your loan eligibility. The actual eligibility for a loan is based on other factors like income, age, credit history, and location.

Benefits of Using Urban Money Personal Loan Eligibility Calculator

Given below are some benefits of using the Urban Money personal loan eligibility calculator:

For Salaried Applicant

If you’re a salaried individual looking to avail a personal loan, it is always a good idea to be aware of your loan eligibility. Some of the factors that affect the total cost of the loan are, the total loan amount, tenure, and interest rates. Knowing your exact loan eligibility is the first step towards ensuring a hassle-free loan experience. Given below is how this loan eligibility checker maybe highly beneficial to you:

  • This powerful AI-backed calculator determines your loan eligibility based on your monthly repayment ability. This is determined by subtracting your monthly liability from your income.
  • The total loan amount is calculated on the basis of your income after monthly liabilities, interest rate, loan tenure, location, age, so as to ensure that there is no extra repayment burden.

For Self-Employed Applicant

The Urban Money eligibility calculator helps you determine your loan eligibility in just a few simple steps. This dynamic calculator considers a number of factors and brings to you accurate results and loan offers. Given below are some of the features of the calculator which makes it so beneficial:

  • This calculator calculates the eligibility by deducting any existing EMIs from your monthly income and factors in other aspects like location, interest rate, date of birth, and tenure to determine your perfect loan amount.
  • You are eligible to either apply for the determined amount or even for a lower loan amount.

What Affects Your Personal Loan Eligibility?

While different lenders might look at different criteria while deciding your loan eligibility, there are a few key common factors that all lenders consider. In this section we will take a look at some of the factors that affect your personal loan eligibility:

  • Credit Score: Any credit score of over 750 is considered to be a healthy indication of a borrower’s repayment ability. Applicant’s with a score lower than 750 can also be approved for a loan, but they might get higher interest rates. The closer your score is to 900, the better are your chances of getting a loan approved on your preferred terms.
  • Employer Reputation and Employment Type: Banks and other loan providers sanction loans easily to salaried employees engaged in the private sector, government sector, or MNCs. Personal loans are also sanctioned to self-employed professionals like architects, doctors, businessmen, doctors, etc. Generally, individuals who are employed in reputable organisations with a decent work history are easily sanctioned loans on their preferred terms.
  • Applicant’s Age: While most lenders and financial institutions consider 65 years to be the maximum age to sanction a loan. Personal loans are more easily offered to applicants between the ages of 21 years and 60 years. Pensioner’s are also usually sanctioned pension loans with terms that vary from normal personal loans.
  • Monthly Income: Most banks sanction a personal loan to salaried employees, with a minimum monthly salary of Rs. 15,000. However, most lenders easily issue loans to an applicant who has a minimum salary of Rs. 25,000. The minimum salary requirement for self-employed persons is at least Rs. 5 lakhs per annum.
  • Work Experience: Most lenders and financial institutions require their applicants to have a total work experience of 2 years, with 6 months or more in the current organisation. In the case of self-employed applicants, they need to be in their current business for at least 2 years to be eligible for a personal loan.

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Frequently Asked Questions (FAQs)

How much personal loan can I avail only based on salary?

The final loan amount that can be approved depends on your monthly income and any existing liabilities. The better your repayment ability, the greater the loan amount.

Are there any charges for checking my personal loan eligibility?

No, the Urban Money personal loan eligibility calculator is absolutely free to use.

How does my income affect my personal loan eligibility?

Your monthly income affects your personal loan eligibility as it indicates your ability to repay the loan amount. The higher your income, the more lenders will be assured in your repayment capacity.

Will I be eligible for a personal loan with even bad credit?

Yes, you may be eligible for a personal loan even with a bad credit score. However, this is totally up to the lender’s discretion.

What is the minimum credit score requirement to avail a personal loan?

Most lenders prefer a minimum credit score of 650 to sanction loans to applicants.