Question
Q: How much of a loan can I get based on my financial standing?
Answer
A:
The loan amount you’re eligible for mainly depends on your income, credit score, existing debts, and repayment capacity. Lenders assess these factors to ensure you can comfortably repay the loan without financial strain.
Key Factors Determining Your Loan Eligibility:
| Factor | Explanation |
|---|---|
| Monthly Income | Higher income usually means higher loan eligibility. Lenders calculate your Debt-to-Income (DTI) ratio, which ideally should be below 40-50%. |
| Credit Score | A good score (750+) increases your chances of getting a higher loan amount at better interest rates. |
| Existing Debts | Includes EMIs on other loans or credit card dues. High existing debts reduce loan eligibility. |
| Loan Tenure | Longer tenure lowers EMI but increases total interest paid; lenders may offer larger amounts with longer tenure. |
| Age and Employment | Stability of your job or business and your age also impact the amount you can borrow. |
Rough Loan Eligibility Formula
Lenders often use this formula:
For example, if your monthly income is ₹50,000, and the lender allows 40% for EMI:
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EMI affordability = ₹20,000
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For a 20-year (240 months) loan, approximate loan amount = EMI affordability × (loan factor based on interest rate and tenure)
How to Check Your Loan Eligibility?
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Online Loan Calculators: Most banks provide free loan eligibility calculators on their websites.
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Bank Visit: Submit your income and financial details for a formal eligibility assessment.
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Consult Financial Experts: They can help maximize your loan amount based on your profile.
Need Help Understanding Your Loan Eligibility?
Contact Advocate B.K. Singh and team for expert guidance on:
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Loan eligibility assessment
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Credit improvement tips
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Legal support for loan agreements
Call : +91 9625961599
Visit: www.legals365.com
Would you like me to prepare a personalized loan eligibility calculation based on your income and expenses?
.By Advocate BK Singh
(Delhi High Court)