Satish Javdekar was very happy with his little tailoring shop. If there was anything he loved dearly then it was his work. He was a humble and happy person. Of late, he had been planning to deck up his small and a bit tattered shop. He was hoping he would get a personal loan to help him accomplish that. Was he by any means eligible for a loan with his monthly net income not exceeding 15,000? Read on to find out what could be one’s options in such a case.
As per Satish the banks are eager to provide loans. He had received at least one call every day on his cell phone, asking him if he had a “personal loan requirement”. Initially he politely refused but soon it got him thinking, if he were to get a loan, then he could revamp his shop. He was hoping to make space for one more sewing machine to fit in. But it wasn’t possible without rearranging his existing stuff.
That morning he was hoping to receive that marketing call, which he would routinely receive for a personal loan. No sooner than he had mentioned his earnings, the tele-caller lost her interest and told him flatly that his chances of receiving a PL were nearly zero. This saddened Satish for he was depending on getting some funds. Good news: there are a few options available. Why do banks have such strict norms on income? Let us talk about that next.
Who will give you a loan if you earn less than 20K?
Ideally, banks do not expect a person to spend more than 50% of their income in EMIs. So, for example, a person who earns Rs. 20,000 in a month, can spend a maximum of Rs. 10,000 as EMI while use the balance Rs. 10,000 to pay for other monthly expenses.
At this statistic, that person would be eligible for a loan of not more than Rs. 4.5 lakh to Rs. 5 lakh. But someone like Satish, if he were to pay 50% of his income as EMI then he would be left with only Rs. 7,500 to run the show all month long. In such exorbitant times, that is a tall order.
So does that mean that there is no chance for a person with less income to get finance? No. Financial institutions realise that money is all important to meet goals like marriage, education and medical emergency. A personal loan is the perfect solution to fulfil any of these needs.
Banks like HDFC, ICICI, SBI, Axis Bank, Yes Bank and many more give small personal loans to low income group individuals. They do, however, put down some extra conditions. For example: An individual earning Rs. 15,000 a month must be residing in one of metropolitan cities like Mumbai, Delhi, Bangalore only. The rate of interest would be between 15% and 20%.
Similarly, SBI would lend to individuals residing in rural and semi-urban areas, earning Rs. 10k a month at a minimum rate of 15.5% not exceeding 24% and the maximum loan amount can be 1.5 lakhs.
NBFCs like Fullerton also give loans to low salaried individuals, albeit at a higher rate of interest upto 35%. The loan amount can be a maximum of 1.5 lakhs to those with a net income of Rs. 15,000. Thus, Satish could be eligible for a loan of not more 1 lakh, assuming he satisfies other parameters.
For those who have very limited means of earning, high interest rates could be quite taxing. Other options are:
A monetary need can gatecrash in your life at any time, irrespective of your income group. Thankfully even with a low income one does have options that would help stay afloat.
To be eligible for a personal loan:
These are some basic parameters that the borrower is expected to meet. Incase the applicant fails to do so then banks usually do not pursue the application. Before you apply for any credit facility please prepare your documents beforehand to save time.
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