As we all know that personal loan can be applied during the time of urgency of money or any time when there is requirement for money, as there is no collateral required to avail the loan and the loan processing time is also less as compare to other loans. It can be use for multiple purposes but the main thing is that how much you can get from a personal loan. Every person has different earnings and different requirements to fulfill, therefore it is vital to know how much money you need and how much you get from your lender.

Bank first evaluates the repayment capacity of the applicant and after that offers the loan amount because personal loan is an unsecured loan, to decrease the losses they took this vital step. The value of loan would be determined by the earning and savings of the applicants.

It means your monthly salary plays a very important role for the loan amount you are eligible for. In this article we will explain how methodically bank will calculate the loan amount an individual is eligible to receive. The main three elements which are taken into consideration while calculating for loan amount eligible for an individual are as follows:

☞ income of the consumer
☞ savings of the consumer
☞ tenure of loan and
☞ rate of interest charged by the bank

Let me show you with an example how a bank and other financial institutions decides ones eligibility amount.

☞ Monthly income of an applicant is Rs 70k
☞ saving amount by him per month is Rs 35k

He applied for loan for some personal reasons and now bank after verifying his personal income will calculate the amount by using this formula mentioned below:HLoan Eligibility Amount = Rs 1,00,000 X Savings/ Per Lakh EMI

☞ Loan tenure – 2years
☞ interest rate – 14% p.a.
☞ EMI amount – Rs 3000

So, the eligibility amount = 1,00,000 X 35000/3000
= Rs 11,66,667

Therefore the applicant having a salary of Rs 70,000 can avail a loan up to Rs 11,66,667.


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