Published on Nov 23, 2020Updated on Nov 8, 2023
A Personal loan is an unsecured loan. Hence, financial institutions prefer advancing it to individuals with sufficient income, as they would be capable of paying the monthly EMIs and less likely to default.
However, for people belonging to the low-income group, getting a personal loan is a fairly difficult task, but not impossible. Eligibility for a personal loan depends on many factors other than income like credit score, repayment capacity, nature of employment, age, etc. Therefore, if you fulfill all the other eligibility factors, then you can easily avail of a low salary personal loan.
Let’s check out in detail, how to successfully get a personal loan with a low income and salary.
Compared to any other category of loan, personal loans are easily available and are approved in the shortest possible time, only if you fulfill the minimum eligibility criteria.
One of the most important factors that financial institutions depend on is the disposable income of the applicant to offer a personal loan, which should be at least 30-40% of the net monthly income.
Financial institutions offer a maximum of Rs 25 lakh as a personal loan depending on the annual income of the applicant.
Therefore, if a person’s monthly income is lower than a certain limit, he or she can easily get a personal loan whose amount is proportional to his monthly income and repayment capability. Since low-income loan applicants are categorized as high-risk borrowers, personal loan interest rates are fixed on the higher end by the lender.
Also, it is advisable to check the personal loan eligibility criteria of respective lenders before applying. For instance, the following is SMFG India Credit’s minimum eligibility criteria for applying for a personal loan. Please note that these vary between lenders.
Minimum work experience required
Experience in the current company
Minimum Credit Score
Minimum Salary (residents of Mumbai or Delhi)
Minimum Salary (residents of any other Indian city)
Apart from the minimum eligibility criteria set for the salaried individuals, self-employed applicants should have a minimum yearly profit after tax determined based on industry and profession.
For availing a maximum personal loan amount based on your income, age and credit score, it is advisable to clear off all the pending dues to improve personal loan eligibility.
Alternatively, you can use a personal loan eligibility calculator to check to know the amount you can borrow on your income/salary. Let’s have a detailed look.
It is a free online tool that lets you check the amount you can borrow based on eligibility criteria. The amount is determined based on your age, income, place of residence, ongoing EMIs, and personal loan interest rates.
The personal loan eligibility calculator is dynamic and provides near accurate results. Therefore, if you want to successfully apply for a personal loan, then apply for a lower amount or up to the eligible amount shown in the calculator.
With features designed to make your life easier, these loans offer a lifeline when you need it the most.
Here's a hassle-free guide on how to apply for personal loan:
Start by entering your phone number. A One-Time Password (OTP) will be sent to your mobile for verification. Confirm your number securely, ensuring the process is both quick and secure.
Provide essential personal information such as your name, address, and date of birth. Additionally, input your bank details, ensuring seamless fund transfer.
Choose your desired loan amount and tenure that best suits your financial needs.
Finally, upload the necessary documents, such as your ID proof, address proof, and income documents. Ensure these are clear and valid for a smooth approval process.
When you're seeking a personal loan on a low salary, it's essential to be strategic in your approach. Here are five key factors to consider:
Securing a personal loan with a low salary might seem challenging, but with the right strategies, it's entirely possible. Here are three key steps to follow:
Maintain Healthy Disposable Income: Lenders prefer borrowers with a disposable income of at least 30-40% of their net monthly income. Calculate your monthly expenses and debts, and ensure that your disposable income meets this criterion. Cutting unnecessary expenses can help.
Build a Strong Credit Score: A good credit score is your best friend when you have a low salary. Ensure timely payments on existing debts and credit cards. Having a credit score above 750 can increase your chances of approval and negotiating a lower interest rate.
Alternative Documentation: If you don't have a salary slip, don't worry. You can submit alternative documents like Form 16, income certificates, bank statements, or income tax returns to demonstrate your income stability and repayment capacity.
The personal loan interest rates offered by SMFG India Credit ranges between 11.99%* to 36%* per annum. The final rate offered to an applicant depends on their credit profile and other factors. The other factors include:
According to the rule, the lower the credit risk, the lower will be the interest rate. Therefore, in case of a low salary personal loan, ensure a good credit score and enough income over fixed monthly obligations to make a good case for a lower interest rate on the personal loan.
As compared to other loan types , personal loan documentation is minimal and doesn’t involve heavy paperwork. The documents required are:
Most financial institutions prefer salary slip and surety of income earning capacity of the applicant while giving out a personal loan. However, due to the varied nature of jobs and occupations, many don’t get the salary slip. In such a case, you have the following options.
You can produce other financial documents like bank account statements, Form 16, income certificate, income tax returns
You can apply with another applicant, who can provide the documents required. In this case, the co-applicant also needs to have a clean credit report, a steady income, and yes - salary slips or other documents to provide stable income proof.
The chances of getting a personal loan with low income and no salary slip are low. Some lenders may be willing to provide a loan depending on how other criteria match, but they would probably also charge you a very high-interest rate.
Therefore, before applying, check all the eligibility criteria and consult with officials before applying. Because, if your loan application gets rejected, it will affect your credit score and lessen the chances of getting a loan in the future.
If your CIBIL score is low, involving a co-applicant or guarantor can help you secure a personal loan.
The processing fees for personal loans can range from 0% to 6% of the loan amount.
The minimum salary requirement for a personal loan is INR 25,000 for residents of Mumbai or Delhi and INR 20,000 for residents of other Indian cities.
Eligibility factors include age (21-60 years), minimum work experience (1 year), current company tenure (6 months), a credit score of 750, and minimum salaries of INR 25,000 (Mumbai/Delhi) or INR 20,000 (other cities).
It takes approximately 72 hours* for processing and funds are transferred within 24 hours* of approval for low-salary personal loans.
Yes, the minimum salary requirement can vary for metropolitan cities, with INR 25,000 for Delhi and Mumbai.
*Terms and conditions apply
**Subject to foreclosure charges. Terms and conditions applicable.
Was this helpful?
*Terms and Conditions apply. Loans are disbursed at the discretion of SMFG India Credit.