Want Rs 5 lakh loan on Rs 20,000 salary? THESE banks can make it happen

While obtaining a Rs. 5 lakh loan on a salary of Rs. 20,000 is challenging, several banks and non-banking financial companies (NBFCs) offer such loans to low-salaried individuals.

Personal loans offer a quick financial solution for emergencies, planned events, or even indulgences. Their popularity stems from the fact that they do not require collateral, making them accessible to individuals without high-value assets. However, eligibility for personal loans depends on various factors, including income, age, credit score, and other lender-specific criteria.

Is a Rs. 5 lakh loan possible on a Rs. 20,000 salary?

The straightforward answer is yes. While obtaining a Rs. 5 lakh loan on a salary of Rs. 20,000 is challenging, several banks and non-banking financial companies (NBFCs) offer such loans to low-salaried individuals. Lenders assess additional factors such as age, assets, credit profile, and the borrower's relationship with the institution to determine eligibility.

Considerations for personal loans on a low salary

Borrowers should note that personal loans for low-salaried individuals typically come with higher interest rates and shorter repayment tenures. This could make the monthly EMI a significant portion of the borrower’s income. Below are details of lenders offering Rs. 5 lakh personal loans to individuals earning Rs. 20,000.

Bank/NBFC        Maximum Loan Amount

KreditBee           Up to Rs. 5 Lakh
Fibe                    Up to Rs. 5 Lakh
MoneyView        Up to Rs. 10 Lakh
Axis Bank           Up to Rs. 10 Lakh
Tata Capital        Up to Rs. 50 Lakh

Instant Short-Term Loans vs. Personal Loans: When to Choose

KreditBee

Interest Rates: 16% - 29.95%
Processing Fee: ₹1,250
Loan Tenure: Up to 3 years

Fibe (EarlySalary)

Interest Rates: 16% - 30%
Processing Fee: 0.1% - 3%
Loan Tenure: Up to 3 years

MoneyView

Interest Rates: 14% - 36%
Processing Fee: Up to 2%
Loan Tenure: Up to 5 years

Axis Bank

Interest Rates: 11.25% - 22%
Processing Fee: Up to 2%
Loan Tenure: Up to 5 years

Tata Capital

Interest Rates: 11.99% - 35%
Processing Fee: ₹101
Loan Tenure: Up to 7 years

Potential challenges

High debt-to-income ratio: A Rs. 5 lakh loan could strain a borrower’s monthly budget, especially for those earning Rs. 20,000. The repayment amount will significantly impact disposable income, making it harder to meet other financial obligations.

Higher interest rates: Borrowers with lower salaries often face higher interest rates, which result in increased EMIs. This can make the repayment process challenging.

Loan rejection risk: Applicants with low credit scores or unstable incomes may face a higher risk of loan rejection. Rejections can further lower credit scores, complicating future borrowing.