Mr. Ravindra Ghosh, a salaried individual, plans to get married next year. Given the high costs associated with weddings, he wishes to avail of a personal loan to fund his wedding. Mr. Ravindra is curious about the maximum limit he is allowed to borrow from banks and lending institutions.
The lower and upper borrowing limit vary from lender to lender. Potential loan seekers have to meet a certain eligibility criteria to borrow a greater amount. The three main criteria that determine the maximum and minimum loan amount that may be borrowed are as follows:
- Regular income
When a lender tries to determine if you qualify for a loan, one of the criteria considered is your income. Lenders will assess all your sources of income as well as any outstanding debts to figure out if you have the capacity to repay the loan. The main goal of doing so is to ensure you are able to make timely payments without running into financial difficulty.
- Repayment capacity
Repayment capacity refers to the borrower’s financial ability to make regular loan repayments. For this purpose, the lender will check the Credit Information Bureau (India) Limited (CIBIL) score of the applicant. Lenders provide loans easily to those applicants who have a higher score as the risk of default is low in such cases.
- Applicant’s eligibility
In order to avail of personal finance, it is necessary to fulfill the lender’s eligibility criteria. Lenders decide whether to accept or decline a loan application on the basis of the applicant’s income, age, CIBIL score, and outstanding debt, besides others. Banks and financial institutions conduct a thorough inspection of all the financial documents to verify the details provided.
Borrowing limits of Tata Capital
Tata Capital, a well-known financial institution has different loan limits for salaried individuals, self-employed professionals, and businessmen. Salaried individuals have a minimum borrowing limit of Rs. 75,000 and maximum limit of Rs. 15 lakhs. Self-employed professionals have a minimum limit of Rs. 3 lakhs and a maximum borrowing limit of Rs. 20 lakhs. Businessmen may borrow a minimum loan amount of Rs. 75,000 and maximum of Rs. 15 lakhs.
Businessmen and self-employed professionals have to submit documents that prove the existence and continuity of their business. For this purpose, it is necessary to submit Profit and Loss statements, Balance Sheet statement, latest Income Tax Returns (ITR), Memorandum of Association (MOA), Article of Association (AOA), certified copy of Partnership Deed, Certificate of Establishment, besides others.
Borrowers who wish to avail of Tata Capital personal loans may therefore borrow finance ranging from Rs. 75,000 to Rs. 15 lakhs. Those with higher income and ability to repay may get loan approval of a higher amount. Applicants who do not have a steady inflow of cash and are frequent job hoppers stand a less chance to get a loan of higher amount. Ultimately, the amount depends on the applicant’s eligibility, income flow, and repayment ability.