When applying for a loan, the employment status and the income of the individual is of utmost significance. This determines the repayment capacity of the individual, and also allows the bank to set the eligible rate of interest and the maximum loan amount for Personal Loan.
For a long time, customers believed that salaried individuals were able to get a personal loan more easily than individuals who were self-employed. However, today loans like Kotak Mahindra Personal Loan are available to both salaried individuals and self-employed individuals. The documentation process and the rate of interest, however, may vary depending upon the type of employment. The Job duration of the individual at a certain company also matters. In some banks, the personal loan is also dependent upon the employer of the applicant.
What is a Personal Loan?
A personal loan is a type of loan offered by the bank to help an individual meet various personal expenses. You can use the loan amount for education, marriage expenses, travel, home renovation, etc.
Features and Benefits of a Personal Loan
There are several features and benefits of personal loans that make them the best option in case of any sudden expense. These features are as follows:
- The processing time is low: Personal Loans are designed for financial emergencies. This is why the turnaround time of these loans is also much faster. If the personal loan documents are in place, one can even get a loan disbursed within 72 hours of application.
- These loans are unsecured: Personal loans are available as collateral free loans. So, eligibility is entirely dependent on the CIBIL score and the monthly income of the individual.
- The Loan Amount Depends on the Net Monthly Income: For most banks, it is mandatory that the EMI should not be over 40-50% of the net monthly income.
- Documentation is simple: The documentation includes identity proof, address proof, age proof and income proof. You need to submit following personal loan documents:
- 2-3 passport sized photographs.
- Photo ID proof such as PAN Card, Passport, Aadhaar Card, Voter’s ID and Driver’s License.
- Proof of Residence such as Passport, Utility Bill or Rental Agreement.
- Bank Statement of the Salary Account for the last 3 months.
- Salary Slip for the last three months.
How much loan amount can Salaried Individuals get?
The loan amount that an individual can get depends upon the net monthly income. The net monthly income is the income after all the monthly bills and expenses.
Also, each lender sets a minimum cap of the minimum income of the individual for availing a personal loan. For example, with Yes Bank Personal Loan, a salaried individual is eligible for the personal loan only if he or she has a net income of Rs.30000. On the other hand, the minimum net monthly income required by Kotak Mahindra Personal Loan is Rs.20000.
Usually, the individual can get up to 12 times the net monthly salary as the loan amount for a personal loan. However, there is a cap on the maximum loan amount that is available. The individual can get 12 times his net income or Rs.10 Lakhs, whichever amount is lesser, in most cases. Contacting the bank is the best way to understand how much loan an individual is eligible for.
It is also a good idea to check the eligibility calculator available online or on the official websites of most banks. This eligibility calculator will check the monthly income and expenses along with various other eligibility criteria. Once they have entered all the details required, customers will be able to get the accurate amount that they can get as per the monthly income provided by them.
Eligibility Criteria
Besides the minimum net salary, there are other eligibility criteria that an individual must fulfill in order to avail a personal loan. These eligibility criteria are as follows:
- There is an age limit. For example, with Kotak Mahindra Personal Loan, the individual should be between 21-58 years old. This varies as per the bank and is also different for salaried and non-salaried individuals.
- For salaried individuals, they have to be a current employee of an MNC or a public or private company that is well recognized in the industry.
- The minimum education qualification is also a deciding factor. In some banks, it is mandatory for the applicant to be a graduate.
- The applicant should have work experience of at least 1-2 years with the same company that he or she is currently with.
- He or should be an active resident in the city that the loan application is being submitted in.
How to Apply for a Personal Loan?
Once the eligibility criteria have been fulfilled, it is possible to apply for a loan online by visiting the official website of the bank and filling up the online form. Some banks also allow an SMS application process. Besides that, the individual can also visit the nearest branch of the chosen institution and submit the application.
Once the documentation is complete, the application is assessed. If the individual fulfills all the eligibility criteria, the loan amount will be disbursed within the period mentioned in the sanction letter.
