Personal Loan For Salaried Employees – Forbes Advisor INDIA


Most, if not all, employees rely on their monthly salary to meet household expenses. The monthly salary happens to be the main and only source of income for the average Indian earner. In this case, the cash flow is almost fixed throughout the year for the employees except in the case of one-off profit-sharing or an annual bonus.

But what happens in a financial emergency? It can be a planned expense, like arranging financing for a dream wedding or a vacation to an international destination. Or sometimes it can even be an unforeseen emergency, like medical bills.

According to the AON survey, there will be a 9.9% wage increase in India this year, reaching a five-year high. Despite the planned salary increases, the personal aspirations and needs of salaried employees are also on the rise, especially those of young professionals, resulting in the need for additional sources of income.

We can never say when we will face financial demands. The good news is that these days the whole ordeal of getting a personal loan for salaried people has been simplified by banks and financial institutions.

Personal loans for employees: what you need to know

When you live paycheck to paycheck, some things get pushed aside. This is simply because not all of your financial goals can be achieved with income from just one salary.

A tailor-made personal loan for employees can be the ideal solution to meet the contingent or uncategorized expenses that arise from time to time.

With the advancement of the FinTech sector, personal loans can now be obtained easily and you can also avail instant loan approvals.

This explains why today, we are seeing more and more people resorting to personal loans to meet their emerging monetary needs, be it long-term or short-term. In fact, a personal loan has become the one-stop solution that helps salaried employees bridge the financial gaps in their lives.

Benefits of a personal loan for employees

Here are the main reasons why the personal loan is the preferred loan choice for employees:

  1. Without warranty

Personal loans are unsecured loans, which means that it is not necessary to produce collateral to take out a personal loan.

  1. Competitive interest rates

Interest on personal loans is lower compared to interest on credit cards. While credit card interest can be as high as 24% to 36% per year, personal loan interest rates can go as low as 10.25%.

  1. Unlimited end use

Personal loans can be used for any purpose you wish, such as home improvement, education or medical expenses and you do not need to obtain prior authorization from the bank for use. final.

  1. Flexible loan term

Personal loans offer flexible repayment options and suitable tenure which helps you repay the loans easily.

  1. Avoid the heavy paperwork burden

Salaried employees don’t have to worry about the hassle of tedious paperwork. Today, the whole process is digitized and you can obtain a personal loan in a few clicks.

  1. High loan amount

Salaried employees can take out personal loans up to INR 50 lakh provided they are eligible for such loans by fulfilling the eligibility criteria.

  1. Rapid loan approval and disbursement of funds

Most lenders have implemented a fully digitized and instant loan approval process. If you qualify for a loan and have a good credit rating, you even have a pre-approved loan available to you. Once the loan is approved, the transfer of the loan amount takes place in a matter of minutes.

  1. Eligibility easy to satisfy

To qualify for a personal loan, you just need to meet the basic eligibility criteria. This ensures that the personal loan process for salaried employees is convenient and hassle-free.

Eligibility Criteria for Salaried Professionals for a Personal Loan

As mentioned earlier, in most cases, salaried professionals do not need to meet extensive requirements to qualify for a personal loan. Eligibility criteria may vary from one lending company to another. Most lenders follow the eligibility criteria below to help them better understand the borrower’s capabilities to repay the loan amount and determine the loan amount that can be offered to the salaried professional.

Here are some of the basic requirements that salaried employees must meet:

  1. You will need to be a resident citizen of India
  2. You must be between 18 and 60 years old
  3. Your monthly salary should not be less than INR 15,000
  4. You must have a total work experience of 12 months or more

Documents required to apply for a personal loan

To apply for a personal loan, the salaried professional must have at hand the documents below as well as the application form:

  1. Identity proof: It can be any of the following documents: PAN card, Aadhar card, voter card, passport, driver’s license, etc.
  2. Passport size photographs
  3. Proof of address: This may include a rental contract, electricity bill, telephone bill, passport, etc.
  4. Salary statements: Salary slips for the last three months are necessary to ensure that the current salary you are receiving is not less than the minimum salary required to take out a personal loan
  5. Proof of income: A copy of bank statements for the last three months will be required

Although the documents required to apply for a personal loan may vary slightly from lender to lender, these documents are more or less required by most banks and loan companies.

Important tips for taking out a personal loan

If you’re looking to qualify for a personal loan, keeping these six key points in mind will help you make the right choice:

  1. Credit score:

As personal loans are unsecured loan products, a good credit score plays an important role when it comes to sanctioning the loan. Lending companies consider the credit score to assess the creditworthiness of the borrower. Any score above 750 increases your chances of getting your personal loan approved.

  1. Beware of hidden fees in personal loans:

There may be some hidden costs that are part of the terms and conditions of the personal loan. These can include prepayment or foreclosure charges or sometimes inflated processing fees. Before applying for a personal loan, make sure you read the terms and conditions carefully and know all the fees that are levied as part of the loan.

  1. Current employer and job profile:

If your employer has a good reputation, this could help create a positive impression on the lender. This is something that most borrowers are unaware of. Your employer’s reputation, as well as your job profile and position in the company are all key factors that help improve the chances of getting an approved personal loan application.

  1. Avoid multiple applications:

It is best not to apply for multiple personal loans in a short period of time. What you need to understand here is that every loan application leads to a credit check – these credit checks lower your credit score and this eventually reflects on your credit report.

  1. Be honest in your applications:

Be sure to provide correct information to lenders. Before processing the loan, the lending company will verify the information provided. Any incorrect information could result in the rejection of your application.

  1. Advantages of multiple income sources:

Having multiple sources of income is another factor that could increase your chances of getting your loan application approved. Rental income and dividends are considered additional sources of income and help improve the creditworthiness of the borrower.

How to get a personal loan?

Let’s take a quick look at three main avenues you can approach to apply for a personal loan:

  • Commercial bank: One of the most common and popular methods of obtaining a personal loan is to approach the bank where you have an account. You might even consider other banks if the interest rates they charge are more favorable to you.
  • Cooperative bank: Cooperative banks operate on a much smaller scale than commercial banks. Cooperative banks are now becoming a preferred option as they offer lower interest rates and flexible repayment options.
  • Online lenders: Many non-bank financial companies (NBFCs) have simplified and accelerated the entire loan application process. Many salaried people consider taking a loan from these NBFCs as they offer instant personal loans with fast disbursement and better repayment standards.


For employees, obtaining a personal loan is no longer a tedious task. The process and eligibility criteria have been redefined to help employees easily deal with unforeseen emergencies.

With NBFCs and digital lenders flooding the market offering reasonable interest rates, employees need not be burdened with financial stress. Although your salary can be your source of income, personal loans can be the emergency fund you need from time to time. This comprehensive guide will point you in the right direction when it comes to applying for a personal loan – that said, planning your finances beforehand can go a long way in ensuring you’re able to save enough and don’t end up collapsing with your personal finances.


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