How to Maximise Personal Loan Amount on Your Current Salary?

A common misconception about personal loans that salaried individuals have is that the loan amount is solely based on their current salary. And so, individuals take their CTC into account when evaluating their eligibility. Whereas your monthly salary is what the lenders look at while assessing your eligibility. In fact, the maximum personal loan amount that you can procure depends on factors like monthly income, existing loan & EMI costs if any, your credit score and your job profile. To prevail as an ideal borrower, you must build a strong profile before even submitting the loan application, such as maintaining a higher credit score, reducing existing debts and having a lower debt-to-income ratio.

Table of Content

Factors Influencing Personal Loan Amount
Tips to Maximise Personal Loan Amount

Initially, after the disbursal of a personal loan, if the amount is lower than what one may need at the time of applying, one can maximise the loan amount through a top-up loan from the current lender. First and foremost, as a borrower, you must understand how lenders evaluate eligibility. Let’s look at the key factors that influence personal loan amount and tips to maximise it.

Factors Influencing Personal Loan Amount

Job Security and Income

Your monthly income is one of the primary factors that lenders look at when determining the amount of your personal loan. In simple terms, a higher and stable income source gives the assurance that you can afford the EMIs costs and still be left with funds to service a larger loan. This makes lenders comfortable in giving larger loans on better terms, as well as giving approval to increase the personal loan amount if the loan agreement permits.

Liabilities

The amount that you pay on your existing liabilities, like credit card bills, car loans, or home loans, can be calculated with the Debt-to-Income (DTI) ratio. It is a type of calculation that lenders use to determine what percentage of your income is allocated to debt. A higher DTI indicates default risk, and so lenders allow salaried individuals with lower DTI to maximise the loan amount.

Credit History & Scores

It demonstrates your history with loans and credit card usage. And if you have never defaulted on loans, then the respective bureau will give you a good score. This indicates that you pay your EMIs and credit card bills on time. All of which is good enough to earn the lender's trust in case you want to maximize your personal loan amount.

Type of Employment & Age

Most lenders use your repayment capacity to determine whether you are eligible to pay EMIs for an extended period in case of a higher loan amount. Borrowers with more working years left may get longer loan tenures and sometimes a higher maximum personal loan limit than someone who is about to retire soon.

Tips to Maximise Personal Loan Amount

Apply with a higher credit score, which is ideally 790 or above.
Clear all the existing debts before sending out an application.
Keep all the proofs of your stable earnings handy.
Lastly, opt for a longer tenure. So that your repayment capacity is not affected by your current salary.

Borrowers must consider the overall cost associated with a personal loan because it would be futile if the extra amount availed were meant to be paid in the form of additional costs. Stability in your employment with longer years to serve shows that you can pay higher EMIs, making you a low-risk borrower of a higher loan amount and thus eligible for better loan terms. The other way to maximise your personal loan amount is to own a business with proof of a stable income. Muthoot Finance offers more flexibility on personal loan eligibility. To learn more, you can visit the nearest branch or get in touch with us online via our official website.