Here is How Much Personal Loan You can Get on a 20,000 Salary


Personal loans are unsecured loans provided by banks and financial organizations to assist you in financing your needs and dealing with life’s uncertainties. For example, a personal loan for a 20000 salary is frequently used to fund kids’ schooling, marriage, and medical bills, among other things. The Reserve Bank of India data denotes that the amount of money borrowed in personal loans has risen dramatically in recent years. Personal loan borrowings totaled Rs. 19.33 lakh crore in June 2018, up from Rs. 5.89 lakh crore in 2010. Personal loans do not need the applicant to submit any security, such as real estate or gold.

However, while applying for a personal loan is undoubtedly easier, it might be challenging to determine what a personal loan is, how much personal loan you can take, and the eligibility criteria. The amount finally granted will be determined by several variables, the most crucial of which are your monthly income and credit score. Your income takes precedence over the other criteria because a lender wants to be confident in your capacity to repay the EMIs on time, eliminating any chance of default.

Check Your Eligibility First

When considering taking out a loan, the first thing that comes to mind is what is a personal loan is and how much loan I can get. Aside from the fundamental subject of the maximum personal loan amount, it is also necessary to meet all the mandatory eligibility conditions. The qualifying standards for salaried and self-employed persons vary. The following are the eligibility requirements for applying for a personal loan for a 20000 salary:

  • The applicant must be an employee of a commercial or governmental firm with a baseline minimum turnover as defined by the company.
  • The applicant has to be between 21 and 60 years.
  • In Mumbai and Delhi, the income should be at least Rs. 25,000, while in other regions of India, it should be Rs. 20,000.
  • A self-employed individual who has been in business for at least 5 years can apply for a loan depending on their profit after tax.
  • The applicant should have at least one year of experience and six months in the current organization.

Personal loan eligibility is calculated using the following methods:

Once you are confident of fulfilling the above-mentioned eligibility criteria, use the following methods to estimate the final amount for a personal loan for a 20000 salary.

Multiplier Method

Banks and financial organizations commonly utilize this approach to determine personal loan eligibility. The better the company’s reputation and a higher income, the higher the multiplier and the greater the likelihood of obtaining a larger loan at a lower interest rate.

For example, you want to know what is a personal loan you can receive on a 30,000 salary. If you have no other EMIs, you may calculate the maximum loan amount by multiplying your monthly earnings by 27. In this scenario, it would be Rs 8,10,000 with a 60-month term. Given below are some examples based on this method:

SalaryExpected Personal Loan Amount
Rs. 20,000Rs. 5.40 lakhs
Rs. 30,000Rs. 8.10 lakhs
Rs. 40,000Rs. 10.80 lakhs
Rs. 50,000Rs. 13.50 lakhs
Rs. 60,000Rs. 16.20 lakhs

Fixed Obligation Income Ratio

This estimation technique is based on the maximum installments you can make with your net income after deducting expenditures such as rent, EMIs, and so on. In most circumstances, lenders consider 50-75% of net income to be payments. Therefore, banks will either extend the loan term or cut the loan amount if your spending surpasses this percentage.

Again, you are considering what is a personal loan for an income of Rs 30,000. If you have an 8,000 monthly EMI, you may typically acquire a personal loan for up to 5.5 lakh. On the other hand, if your monthly EMI is smaller, say 3,000, you may be eligible for a significantly larger personal loan of up to 7.7 lakh — given you have a good credit rating and are seeking a 60-month term. Given below are some examples based on this method

Salary FigureExisting EMI of Rs. 3000Existing EMI of Rs. 5000Existing EMI of Rs. 8000Existing EMI of Rs. 10000
Rs. 20000Rs. 4.08 lakhsRs. 3.60 lakhsRs. 2.88 lakhsNot applicable
Rs. 30000Rs. 7.70 lakhsRs. 6.00 lakhsRs. 5.50 lakhsRs. 4.80 lakhs
Rs. 40000Rs. 8.88 lakhsRs. 8.40 lakhsRs. 7.68 lakhsRs. 7.20 lakhs
Rs. 50000Rs. 11.28 lakhsRs. 10.80 lakhsRs. 10.08 lakhsRs. 9.60 lakhs
Rs. 60000Rs. 13.68 lakhsRs. 13.20 lakhsRs. 12.48 lakhsRs. 12.00 lakhs

For further information on policies, visit your local bank branch, or consult their app or website.

Interest Rates

Apart from the loan amount, the interest rate is also crucial when applying for a personal loan for a 20000 salary. Personal loans are available at competitive rates based on your credit history, requirements, and other variables that may impact your total loan amount and the turnaround period. An overview of India’s personal loan interest rates and fees is shown below.

Interest Rate11.99% to 36.00%
Processing FeeUp to 3% of the loan amount
Foreclosure Charges0% to 7%
Loan TenureUp to 5 years
Lowest EMI (per lakh)Rs. 2275

Note: Lenders levy processing fees in addition to interest and foreclosure fees if the loan is prepaid.

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