Salaried employees with low monthly incomes often face difficulties in securing high loan amounts due to stringent lender requirements. However, with the right approach and strategies, it is possible to overcome these challenges and achieve financial goals. This blog aims to address the hurdles faced by low-salaried individuals and provide actionable insights into obtaining high loan amounts.

While the process may seem daunting, there are ways to enhance eligibility and secure the desired loan amount. Lenders consider factors beyond just income, such as creditworthiness, employment stability, and co-applicant support, which can influence loan approvals.

The objective of the Blog

This blog will:

• Highlight the common challenges faced by low-salaried employees when seeking high loan amounts.
• Provide insights into practical strategies and options for overcoming these challenges.

Challenges Faced by Low-Salaried Employees in Securing High Loan Amounts

Income Constraints

Income is a critical parameter for lenders while assessing loan applications. Low salaries pose the following challenges:

• Limited Repayment Capacity: Borrowers with lower incomes are considered less capable of managing high monthly EMIs, leading lenders to reduce the sanctioned amount.
• Higher Risk Perception: Lenders associate low incomes with higher default risks, making them cautious in granting high loan amounts.

For instance, if your salary is ₹20,000 per month, lenders may cap the maximum loan eligibility to prevent over-leveraging.

Stringent Eligibility Criteria

Salaried individuals with low incomes often struggle to meet strict eligibility standards, such as:

1. Minimum Salary Requirements:
   • Many banks and NBFCs set a minimum income threshold of ₹25,000 per month for personal loans.
   • Applicants earning below this amount may find it challenging to qualify.
2. Debt-to-Income (DTI) Ratio:
   • The DTI ratio measures your total monthly debt obligations against your gross income.
   • A high DTI ratio (above 50%) signals financial strain, reducing your loan eligibility.
3. Other Financial Obligations:
   • Pre-existing debts like credit card bills or previous loans further limit the borrower’s repayment ability.

CIBIL Score Dependency

A CIBIL score is crucial in determining your loan approval and interest rate. For low-salaried individuals, a poor credit score can exacerbate difficulties:

1. Impact of Low Scores:
   • A score below 650 significantly reduces the chances of approval for unsecured loans.
   • Even if approved, borrowers may face higher interest rates and stricter repayment terms.
2. Interplay of Income and Creditworthiness:
   • Low salaries combined with poor CIBIL scores signal high-risk borrowers, prompting lenders to impose additional conditions or reduce the loan amount.

Factors Lenders Consider for Loan Approval

1. Income Stability

A steady and consistent income is a key determinant of loan approval.

• Why It Matters:
  • Lenders view income stability as an indicator of repayment ability.
  • Long employment tenure with the same organization enhances reliability.
• What Lenders Look For:
  • Regular monthly salary credited to a bank account.
  • Employment with a reputed organization or government body.

2. CIBIL Score

Your CIBIL score is one of the first metrics lenders check to evaluate your creditworthiness.

• Minimum Score for Approval:
  • A score of 700+ is ideal for easy approval.
  • Scores between 650–699 may still get approval but at higher interest rates.
• Impact of CIBIL Score on Loan Terms:
  • A high score can lead to lower interest rates and higher loan amounts.
  • A poor score results in stricter terms or outright rejection.
• How to Check Your CIBIL Score:
  • Use Kreditbazar’s platform to access your free CIBIL report and identify areas for improvement.

3. Debt-to-Income (DTI) Ratio

The DTI ratio compares your total monthly debt obligations to your gross income.

• Ideal DTI Ratio:
  • Lenders prefer a DTI ratio of below 40%.
  • A high DTI ratio indicates financial strain and increases the risk of rejection.
• Strategies to Lower Your DTI:
  • Pay off existing debts before applying for a new loan.
  • Avoid taking on new liabilities, such as credit card purchases or EMIs.

4. Job Profile and Employer Credibility

The nature of your job and the reputation of your employer play a significant role in influencing loan approval.

• Reputed Employers:
  • Employees working for MNCs, government organizations, or established companies are considered lower-risk borrowers.
• Job Stability:
  • A history of frequent job changes may raise red flags for lenders.

5. Existing Financial Obligations

Lenders also assess your ongoing financial commitments, such as active loans or credit card EMIs.

• Impact on Eligibility:
  • High existing obligations reduce your repayment capacity for a new loan.
• How to Manage Obligations:
  • Consolidate or close smaller loans to improve your eligibility.

Strategies for Low-Salaried Employees to Get High Loan Amounts

Low-salaried employees can overcome income-related challenges by implementing these strategies:

1. Improve Your CIBIL Score

Your credit score significantly impacts loan approval and terms.

• Steps to Enhance Your Score:
  • Pay all EMIs and credit card bills on time.
  • Reduce your credit utilization ratio by keeping usage below 30%.
  • Check your credit report regularly for errors and dispute inaccuracies.
• Why It Matters:
  • A higher score not only improves approval chances but also secures better interest rates.

2. Opt for a Longer Repayment Tenure

A longer tenure reduces your monthly EMI, making it easier to qualify for a higher loan amount.

• Benefits of Extended Tenures:
  • Lower EMI burdens make repayment manageable.
  • Increased approval chances as lenders view it as reduced financial stress.
• Example:
  • For a loan of ₹5 lakh at 12% interest, the EMI for 3 years is ₹16,607, while for 5 years, it reduces to ₹11,122.

3. Include Additional Sources of Income

Declaring other sources of income boosts your repayment capacity.

• Examples of Additional Income:
  • Freelance projects or side jobs.
  • Rental income from properties.
  • Interest earned on fixed deposits or investments.
• Tip:
  • Provide verifiable proof of these income sources to lenders.

4. Apply with a Co-Applicant

Adding a co-applicant with a higher income or better credit score can strengthen your loan application.

• Benefits of Co-Application:
  • Increases combined repayment capacity.
  • Reduces risk perception for lenders.
• Who Can Be a Co-Applicant:
  • Immediate family members like a spouse, sibling, or parent.

5. Choose Secured Personal Loans

Secured loans, backed by collateral, offer a viable solution for low-salaried individuals.

• Collateral Options:
  • Fixed deposits, property, or gold.
  • Collateral reduces risk for lenders, enabling higher loan amounts.
• Why Secured Loans Work:
  • Lenders are more willing to approve large amounts when assets are pledged.

6. Negotiate with Lenders

Approach NBFCs or private lenders that offer flexible eligibility criteria and customized loan solutions.

• Why Choose NBFCs:
  • More lenient policies for low-salaried employees.
  • Tailored repayment options to suit individual needs.
• Kreditbazar Advantage:
  • Compare multiple loan offers from partnered NBFCs through Kreditbazar’s platform to find the best deal.

Role of Kreditbazar in Helping Low-Salaried Employees

Kreditbazar specializes in bridging the gap between salaried employees and lenders, ensuring that even low-income earners have access to the best loan solutions.

1. Loan Comparison Platform

Kreditbazar simplifies the decision-making process by allowing users to compare multiple loan offers on a single platform.

• How It Helps:
  • Compare interest rates, repayment tenures, and EMI options from different lenders.
  • Identify the most affordable and suitable loan for your financial needs.
• Advantages for Low-Salaried Employees:
  • Saves time by eliminating the need to approach multiple lenders individually.
  • Provides a clear picture of loan eligibility and cost.

2. Access to NBFCs and Private Lenders

Kreditbazar connects borrowers with NBFCs and private lenders who cater to low-income profiles.

• Why NBFCs Are Important:
  • They offer flexible eligibility criteria compared to traditional banks.
  • Higher chances of approval for individuals with low salaries or suboptimal CIBIL scores.
• Kreditbazar Advantage:
  • Leverages partnerships with a wide network of lenders to secure loans for diverse borrower profiles.

3. Credit Advisory Services

For employees with a low CIBIL score, Kreditbazar offers valuable credit advisory services to improve their creditworthiness before applying.

• Key Services:
  • Personalized tips on boosting your CIBIL score.
  • Guidance on reducing debt-to-income ratios.
  • Assistance with rectifying errors in credit reports.
• Impact:
  • Improved credit profile enhances loan approval chances and secures better interest rates.

4. Customized Loan Options

Kreditbazar provides tailored loan solutions that align with the borrower’s financial situation.

• Features of Customized Loans:
  • Flexible repayment options to suit low-salaried borrowers.
  • Loans with lower EMIs or extended tenures to ease repayment pressure.
• How It Helps:
  • Empower borrowers to achieve their financial goals without overburdening their budgets.

Best Practices for Low-Salaried Employees Seeking High Loans

To secure higher loan amounts, low-salaried employees should follow these actionable steps:

1. Maintain a Healthy Credit Score

Your CIBIL score is a crucial factor in determining loan approval and interest rates.

• Best Practices:
  • Pay all EMIs and credit card bills on time to avoid penalties.
  • Keep your credit utilization ratio below 30%.
  • Regularly monitor your credit report to identify and dispute inaccuracies.
• Kreditbazar Tip:
  • Use Kreditbazar’s platform to check your CIBIL score and receive personalized improvement suggestions.

2. Limit Existing Financial Obligations

Keeping your debt under control is essential to improve your eligibility for higher loan amounts.

• What to Avoid:
  • Taking on multiple loans simultaneously.
  • Missing payments on existing EMIs or credit card dues.
• Pro Tip:
  • Consolidate small debts to reduce your debt-to-income ratio.

3. Provide Comprehensive Documentation

Submitting complete and accurate documentation strengthens your loan application.

• Essential Documents:
  • Income proof: Salary slips, bank statements, and Form 16.
  • Identity proof: Aadhaar card, PAN card, or voter ID.
  • Additional proofs: Rental agreements or other income sources to support your repayment capacity.
• Why It Matters:
  • Streamlined paperwork reduces processing time and improves approval chances.

4. Opt for Pre-Approved Loans

Pre-approved loans offer a hassle-free way to secure funds quickly.

• Advantages of Pre-Approved Loans:
  • Faster processing with minimal documentation.
  • Higher approval chances as lenders already consider you eligible.
• Why Kreditbazar?
  • Kreditbazar provides exclusive pre-approved loan offers from its partnered NBFCs and private lenders, making the process seamless for low-salaried employees.

Case Studies: Success Stories of Low-Salaried Borrowers

Example 1: Borrower Earning ₹20,000/Month Securing ₹5 Lakhs Using a Co-Applicant

• Background:
  A salaried employee with a monthly income of ₹20,000 needed a loan of ₹5 lakhs for a medical emergency. Despite his low salary, the borrower successfully secured the loan by applying with a co-applicant.
• Key Strategy:
  • Included his spouse as a co-applicant, who had a higher income and a strong credit score.
  • This improved the overall repayment capacity and creditworthiness in the lender’s eyes.
• Outcome:
  • The lender approved the loan with a competitive interest rate and flexible repayment terms.
  • The borrower managed to address the emergency without financial strain.
• Takeaway:
  • Co-applicants can significantly enhance loan eligibility, especially for borrowers with lower salaries.

Example 2: Applicant with a Salary of ₹22,000/Month Opting for Secured Personal Loans

• Background:
  An individual earning ₹22,000 per month wanted to secure a loan of ₹4 lakhs to fund their child’s education. However, due to their low salary and existing obligations, their initial loan applications were rejected.
• Key Strategy:
  • The borrower offered a fixed deposit as collateral, opting for a secured personal loan.
  • This reduced the lender’s risk and ensured approval.
• Outcome:
  • The borrower received the required amount with lower interest rates due to the secured nature of the loan.
  • Timely repayments further improved their CIBIL score for future financial needs.
• Takeaway:
  • Offering collateral like property, gold, or fixed deposits can open doors to higher loan amounts with better terms.

Conclusion

Securing a high loan amount with a low salary may seem challenging, but it is far from impossible.

• Key Insights:
  • Low income does not mean limited options; strategies like including a co-applicant or opting for secured loans can significantly improve eligibility.
  • Proper planning, maintaining a healthy CIBIL score, and reducing existing obligations are critical to success.

By choosing the right lender and leveraging tailored solutions, borrowers can unlock financial opportunities that suit their unique needs.

Kreditbazar’s Assistance

At Kreditbazar, we specialize in empowering low-salaried employees to achieve their financial goals.

• Why Choose Kreditbazar?
  • Access to NBFCs and private lenders willing to cater to low-income borrowers.
  • Expert credit advisory services to guide you in improving your profile.
  • An easy-to-use platform for comparing interest rates, repayment terms, and loan options.
  • Exclusive pre-approved loan offers for quicker and hassle-free processing.

“Ready to explore high-loan options with a low salary? Visit Kreditbazar today and secure the financial support you need!”

Take the first step toward achieving your dreams by partnering with Kreditbazar. Compare loans, improve your credit profile, and enjoy tailored solutions that make high-loan amounts accessible for everyone. Start your journey now!

FAQs About Personal Loans for Low-Salaried Employees

Q1. Can I get a personal loan if my salary is less than ₹20,000 per month?
Ans1. Yes, many lenders provide personal loans to individuals earning less than ₹20,000 per month. However, your loan amount might be restricted, and interest rates could be higher.

Q2. What is the minimum salary required to apply for a personal loan?
Ans2. Most lenders in India require a minimum monthly income of ₹15,000–₹25,000, depending on the lender’s policy and location.

Q3. Can a low salary impact my loan approval chances?
Ans3. Yes, a low salary might limit your repayment capacity in the lender’s eyes. However, including a co-applicant or offering collateral can improve approval chances.

Q4. How much loan can I get if my monthly salary is ₹25,000?
Ans4. With a salary of ₹25,000, your loan eligibility typically depends on factors like your debt-to-income (DTI) ratio, credit score, and financial obligations. On average, you may qualify for a loan amount between ₹2–₹5 lakhs.

Q5. What factors determine the maximum loan amount I can get?
Ans5. Key factors include your income, credit score, existing debts, repayment capacity, and the lender’s specific criteria.

Q6. Can I get a loan higher than my annual salary?
Ans6. Yes, some lenders offer loans that are up to 12–15 times your monthly salary, depending on your creditworthiness and repayment history.

Q7. What is the minimum CIBIL score required for low-salaried employees?
Ans7. A CIBIL score of 700 or above is ideal for personal loan approval. However, lenders may consider scores as low as 650 for salaried applicants with additional strengths.

Q8. Does a low salary impact my CIBIL score?
Ans8. No, your salary doesn’t directly affect your CIBIL score. However, irregular repayments, defaults, or high credit utilization can harm your score.

Q9. How can I improve my CIBIL score to get a higher loan amount?
Ans9. Pay EMIs and credit card bills on time, reduce your credit utilization ratio, and avoid frequent loan applications.

Q10. Can I get a longer repayment tenure with a low salary?
Ans10. Yes, many lenders offer flexible repayment tenures ranging from 12 to 60 months, even for low-salaried employees.

Q11. Does choosing a longer repayment tenure increase my loan eligibility?
Ans11. Yes, a longer tenure reduces your monthly EMI burden, improving your debt-to-income ratio and increasing your chances of approval.

Q12. What happens if I miss an EMI payment?
Ans12. Missing an EMI payment can result in penalties, negatively impact your credit score, and reduce your future borrowing potential.

Q13. How can a co-applicant help me secure a high loan amount?
Ans13. Adding a co-applicant with a higher income or better credit score can improve your loan eligibility and help secure better terms.

Q14. Can I apply with a guarantor instead of a co-applicant?
Ans14. Yes, a guarantor can enhance your loan application, but they must agree to take responsibility for repayment if you default.

Q15. Is a secured personal loan better for low-salaried employees?
Ans15. Yes, secured loans backed by collateral like property or fixed deposits often come with lower interest rates and higher approval chances.

Q16. Should I approach NBFCs instead of banks for a personal loan?
Ans16. NBFCs often have more flexible eligibility criteria and are more willing to lend to low-salaried employees, but interest rates may be higher than banks.

Q17. What are pre-approved loans, and can I qualify for one?
Ans17. Pre-approved loans are offered to existing customers with good credit profiles. If you have a healthy transaction history, you may qualify even with a low salary.

Q18. Are payday loans a good option for low-salaried employees?
Ans18. Payday loans can be a quick solution but often come with extremely high interest rates. They should only be considered as a last resort.

Q19. What documents are required to apply for a personal loan?
Ans19. You’ll typically need identity proof, address proof, income proof (salary slips and bank statements), and employment proof.

Q20. Can I get a loan if I recently switched jobs?
Ans20. Most lenders require at least six months to one year of employment with your current employer. However, some NBFCs may be more lenient.

Q21. How long does it take to get a personal loan?
Ans21. If you meet all criteria and provide the necessary documents, loans can be approved within 48 hours or even on the same day for pre-approved applicants.

Q22. Do low salaries lead to higher interest rates?
Ans22. Not necessarily, but low salaries combined with a low credit score may result in higher interest rates due to perceived risk.

Q23. Can I negotiate interest rates with my lender?
Ans23. Yes, you can negotiate based on your credit history, your relationship with the lender, or by offering collateral.

Q24. What is the typical interest rate range for low-salaried applicants?
Ans24. Interest rates for personal loans typically range from 10%–24%, depending on the lender and your credit profile.

Q25. How does Kreditbazar help low-salaried employees?
Ans25. Kreditbazar provides loan comparison tools, access to NBFCs and private lenders, and credit advisory services to enhance eligibility.

Q26. Can Kreditbazar assist me in improving my credit score?
Ans26. Yes, Kreditbazar offers tips and guidance on improving your CIBIL score before applying for a loan.

Q27. Does Kreditbazar offer pre-approved loan options?
Ans27. Yes, Kreditbazar partners with lenders to provide pre-approved loan offers for eligible applicants.

Q28. Should I reduce my existing debts before applying for a loan?
Ans28. Yes, paying off existing debts improves your debt-to-income ratio and enhances your loan eligibility.

Q29. Is it wise to consolidate my debts with a personal loan?
Ans29. If you can secure a loan with a lower interest rate, debt consolidation can simplify repayments and reduce financial stress.

Q30. What is the best way to calculate my EMI before applying for a loan?
Ans30. Use an EMI calculator, like the one available on Kreditbazar, to estimate your monthly payments based on loan amount, interest rate, and tenure.