How to get a personal loan with a low salary?

It is almost impossible to know in advance when monetary needs come knocking on our doors. On many occasions, the knocks are so sudden and unexpected that we do not quite have enough savings in hand to counter these financial challenges.

What is the easiest way to ‘weather the storm’ then?

Personal loans. Yes, it’s a well-settled fact now, which many people have acknowledged and acted upon too.

Simply put, personal loans are nothing but a credit facility provided to applicants who have a steady income. From a plethora of factors that influence the approval of a personal loan, income is perhaps the most important one. Your income/salary gives the lender an accurate assessment of whether you can repay the loan in time or whether you have any risk of default in future. The higher your income is, the more confident your lender will be to grant a personal loan to you.

Does it mean that you can’t avail a loan if you have a low income or low salary? No way!

Cash crunches can hit low salaried individuals even harder. Many reputed lenders such as SBI, HDFC, ICICI, Axis Bank etc have acknowledged the latent need for personal loans in these individuals. Hence, they have devised various personal loan products so that individuals with a low salary can get their fair share of much-needed help when they are hit by a financial crunch.

The following chart will give you a fair idea about the income criteria and the maximum personal loan amount associated with such schemes by 5 top banks/NBFCs in India-

In this blog, we will discuss a few of them. We will also tell you some ways by which you can enhance your chances of getting a personal loan, even with your low salary.

How can an individual with a low salary boost his chances of getting a personal loan?

The below-mentioned ways will help you in this regard. They will make sure that you no longer need to bear the agony of loan rejection, in spite of your low income/salary.

• You can get a personal loan against a fixed deposit

Earning a low salary can no longer be a hindrance. You can still qualify to get the cheapest personal loans offered by a bank/NBFC. Now you stand a great chance of getting your personal loan approved if you have a fixed deposit (FD) with that particular bank. This FD will provide some sort of a security to the bank against a possible default from your end. Therefore, it will have no hesitation in approving a personal loan to you against the FD. If you have a good record with the bank and can negotiate well enough, you may even obtain a loan up to 90 % of your FD value.

• Personal Loan against a life insurance policy

An individual with a low salary can also get a personal loan if he has a life insurance policy in his name (as the insurer). Many lenders offer personal loans against an insurance policy but with one condition. The policy needs to be transferred to the name of the lender before the approval of the personal loan to the individual. The insurance premium and the number of times the same has been paid prior to the loan application are also considered by the lender.

• Opt for a personal loan from co-operative banks and P2P lenders

Co-operative banks in your locality may offer easy personal loan schemes for low salaried individuals like you. These banks are not known to have strict eligibility criteria and you can easily get your personal loan approved with them.

Another option is to apply for a personal loan from Peer To Peer (P2P) lending companies. These organizations thrive to make credit easy and affordable for individuals in all income categories. With these companies, you stand a great chance to get a personal loan at cheaper interest rates as compared to other commercial banks.

Some popular personal loans for individuals with a low salary

1. SBI Saral Personal Loan for Low Salary people

Salient features-

• A salaried person can get this personal loan amounted to 12 times his NMI (with a maximum limit of Rs 10 lakhs).
• You are not required to pledge any security to avail this personal loan from SBI
• You need to repay the loan in 48 EMIs (maximum).
• A nominal processing fee is charged by the Bank in the range of 2% to 3% of the loan amount, plus the applicable taxes.

Income criteria-

The minimum Net Monthly Income requirement for this SBI personal loan is fixed at Rs 10000 for applicants in rural/semi-urban areas. For applicants in urban areas, the minimum monthly income should be Rs 24000.

1. HDFC Personal Loan for Low Salary people

Salient features

• The applicant should be more than 21 years of age at loan application and less than 60 years at maturity
• If you apply online, you can get an in-principle loan approval within a couple of minutes
• Under the HDFC Diva personal loan, women applicants are eligible for a pre-approved personal loan amounting to Rs 3 lakhs

Income criteria-

• This HDFC personal loan has a minimum monthly income criterion of Rs 15000 for applicants residing in the metros and in Cochin, Hyderabad, Bangalore, Pune and Ahmedabad.
• This minimum monthly income is kept at Rs 12000 for applicants residing in other Indian cities.

ICICI Bank Personal Loan for Low Salary people

Salient features

• A salaried person can avail this personal loan for any amount in the range of Rs 50000 to Rs 20 lakhs, to address their needs.
• The applicant should be in the age group of 23 years to 58 years
• You can have a flexible loan  tenure between 12 months to 60 months
• Once all your documents are found to be in proper order, the personal loan will be disbursed to you within just 72 hours.

The monthly salary/income of an applicant is the most important criteria for lenders to approve a personal loan to a borrower. It’s only natural that lots of doubts may creep into your mind, particularly if you have a low salary to cope with. Hope the above-mentioned details have cleared most of your doubts and you can approach a lender for your much-needed personal loan with an open mind now.