01 JULY, 2022

When you want instant access to funds during an emergency or to meet unforeseen financial obligations, a personal loan is a helpful option. An instant personal loan ensures that you get the money you need quickly with minimal documentation and formalities. You can apply for a personal loan online and there is no need for collateral as it is an unsecured loan.

Despite the seamlessness with which you can apply for a personal loan, there are always chances of application rejection if you apply for an amount that is too high compared to your eligibility. Hence, it is crucial to be aware of the personal loan eligibility criteria before you apply. There are a lot of factors that go into determining your personal loan eligibility. If you don’t meet the eligibility criteria, you may either be rejected for the loan or be approved for a lower amount. Hence, to be clear on how much personal loan you can get, you should first calculate your personal loan eligibility.

Calculating your personal loan eligibility 

Here is what goes into calculating your personal loan eligibility and what you should keep in mind:

  • Income

Your income helps the lender determine your repayment capacity. The higher your income, the higher the personal loan amount you can be approved for. This is because, with a high income that is stable and regular, it won’t be difficult to meet your Equated Monthly Instalment (EMI) dues.

  • Credit score

Other than your repayment capacity, your creditworthiness is an important factor in determining your personal loan eligibility. The higher your credit score, the higher amount you can be approved for because the lender will know that you are a low-risk borrower.

  • Existing debt

If you currently have any debt – credit card loans, home loans, personal loans, etc – this is also something the lender will look into. Here, the lender looks for what your debt-to-income ratio is. The lower this ratio, the higher the personal loan you can be approved for. This is because this tells the lender that you don’t have too many other EMIs for your income to be directed to every month.

How much personal loan amount can you get?

Sitting and figuring out your personal loan eligibility yourself may just amount to a wrong estimate as a result of guesswork. Instead, you can use Kotak’s personal loan eligibility calculator. This is a free, online calculator that will take in relevant information such as your income, current debt obligations, etc., and calculate the personal loan amount that you are eligible for. It only takes a few seconds and is easy to use. This calculator is helpful in not only giving you an estimate of the loan amount you are eligible for but also helping you plan financially accordingly. It’s important to remember, however, that this number is simply an estimate and the actual loan amount that you will be approved for can be slightly different.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.