Importance of Gross Income While Availing a Personal Loan

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Introduction

Gross income is not only a key factor in personal loan approval, but it also influences interest rates and the loan amount.

What Is Gross Income?

Gross income is your income before any deductions or taxes. Salary, rental income, and dividends are a few examples.

Is Net Income Different From Gross Income?

Net income is what remains with you after taxes and other deductions have been taken out of the gross income.

Importance of Gross Income When Applying for a Loan

Let us see the different aspects of a personal loan application that are affected by gross income:

1. Eligibility Criteria

Lenders have minimum income requirements. A higher gross income suggests your ability to fulfill the monthly loan payments in addition to existing expenses.

2. Loan Amount

A high and steady gross income may get you higher loan amounts, as long as you fulfill other eligibility requirements.

3. Interest Rate

A higher gross income may get you lower interest rates as you are seen as a lower-risk borrower.

4. Debt-to-Income (DTI) Ratio

Gross income helps assess the DTI ratio, an important factor in the approval process. A ratio of 30% or below will increase your approval chances.

Looking for a Personal Loan?

SMFG India Credit offers loans up to INR 25 lakhs* with attractive interest rates starting from 11.99% per annum*.

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* Please note that this webstory is for your knowledge only. Loans are disbursed at the sole discretion of SMFG India Credit. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG India Credit's policy at the time of loan application. If you wish to know more about our products and services, please contact us