₹25,000 monthly income? Here’s how much personal loan you can avail

Banks and non banking financial institutions in the country have witnessed a clear surge in demand for personal loans. Especially among young professionals and first time borrowers.

Now with the Reserve Bank of India (RBI) tightening the regulations in 2024-25 to ensure responsible lending and credit management, understanding how much you can borrow on a modest income or salary of ₹25,000 per month is important for efficient financial planning.

Eligibility criteria required for personal loan

Most of the leading financial institutions require a minimum in hand monthly salary or income of ₹13,500 to ₹25,000 for the approval of personal loan applications, depending on whether you are self-employed or salaried.

Further, for a salary of ₹25,000 you must be at least 21 years of age and not exceed 60 years at loan maturity. A clean credit profile and a good credit score preferably above 750 is generally expected for smooth and seamless approvals.

How are loan amounts determined?

Financial institutions primarily use two methods to determine eligibility:

• Multiplier method: In this method, the loan amount is calculated as a multiple (generally 10-24 times) of your net monthly income. Now with a ₹25,000 salary this generally results in an eligible loan amount of ₹2.5 lakh to ₹3.75 lakhs, depending on the applicant's credit profile, creditworthiness and lending institutions policies and rules.
• EMI/NMI Ratio: Financial institutions prefer that your Equated Monthly Instalment i.e., EMI amount does not exceed 40-50% of your net monthly salary. That is why for a ₹25,000 salary this means your EMI should ideally fall within the range of ₹10,000 and ₹12,500 and not more than that.

How much loan can you avail with a bank with a salary of ₹25,000?

Note: Loan amounts vary based on your credit profile, city, employer category, and existing obligations. Final eligibility is determined by the bank’s internal assessment and RBI’s latest 50% Loan-to-Income cap.

Therefore, the Reserve Bank of India’s new guidelines have made personal loan approvals more strict. The focus is to bring down defaults and problems later on.

Key changes include a cap on the loan to income ratio at 50%, stricter KYC and income verification and cooling off period between loan applications. These steps in the long run will help borrowers to repay their loans comfortably.

Documentation and application process

Now to apply for these loans you will be required to submit your PAN, Aadhaar, salary slips, recent bank statements and proof of address. Most of the leading banks now provide applicants with minimal paper work and instant loan processing and approval through their online portals.

Therefore, on a ₹25,000 monthly salary you can generally borrow between ₹2.5 lakh to ₹3.75 lakh as a personal loan. This will be possible provided you meet the lenders eligibility criteria and maintain a good credit score and a clean credit profile.

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