Personal Loan with ₹20,000 Salary – Your Step By Step Guide

personal loan for 20000 salary

Taking a personal loan with a salary of ₹20,000 might send you through a whirlwind of questions.

“Can I repay the loan on time?”
“Will I even qualify for the loan?”
“Are the EMI payments going to be more than my salary?”
“Do banks even offer personal loans for people earning ₹20,000?”

Well, first, take a deep breath and sit back while we address every concern.

To begin with, the latest Periodic Labour Force Survey 2023 reveals that an average Indian earns around ₹20,000. So, yes, banks do offer personal loans to one of the largest income demographics.

Now, keep reading the blog as we answer the rest of your questions.

But, if we were to summarise the blog in one line, we would say- yes, you can get a personal loan from INR 20,000 to INR 10,00,000 with manageable EMIs and flexible repayment tenure.

personal loan

How Much Personal Loan Can you Get on 20,000 Salary?

There are a few different ways of calculating the personal loan amount based only on your salary.

Multiplier Method

Banks use a predetermined multiplier to multiply the applicant’s net wage to find the personal loan amount. Usually, the multiplier number lies between 10 and 24. However, it varies from bank to bank. You can even negotiate for a higher multiplier if you demonstrate financial stability or get a co-signer.

Now, let’s see an example of how a multiplier works:

Let’s assume that the bank has a loan multiplier of 15.

Therefore, the maximum loan amount you can borrow= ₹20,000 x 15= ₹3,00,000

EMI/NMI ratio

Lenders find the ratio of monthly EMI and net monthly income before finalizing the loan amount. Remember, the monthly EMI calculation also includes the installment amount of the proposed personal loan.

A ratio of 50 or below makes you eligible for the loan. In other words, you should not be paying more than half of your income as EMI. Now, let’s get to the calculation.

Say, you’re ready to pay ₹4000 as EMI.

Then, the ratio= 4000/20000= 0.2 or 20%.

The loan amount becomes = (4000/0.2) x 100 = ₹20,00,000

Note: Just because you can doesn’t mean you should. Even though you are eligible for a large amount, it is advisable to take the loan for the amount you need and not more.

Again, the loan amount varies depending on other factors as well.

Calculate EMI of a Personal Loan with a Salary of Rs. 20000

Personal Loan Eligibility Criteria on 20000 Salary

Your credit score takes a small hit with each loan inquiry. Getting rejected for a loan only makes things worse. Therefore, check your eligibility criteria before approaching the financial institutions.

Use an online test to check if you are eligible for a personal loan. If you get a positive result, contact the bank officials and reconfirm the criteria for extra precaution before proceeding with the loan application. Just think of this step as the fast-track preparation you do the night before your final exam.

Now, the loan providers initiate a credit score check immediately after you hit submit on your loan application. The credit score rates your credit history which includes:

  • Current EMIs
  • Ongoing loans
  • Credit card debts
  • Missed payments
  • Repayment schedules
  • Default loans
  • Foreclosures

More often than not, a credit score above 700 makes you eligible for a personal loan. However, there’s a twist.

Bank officials will reject your loan applications, irrespective of your credit score, if you do not have an EMI/NMI ratio below 50. The reason for this is pretty simple. Banks are NOT predatory organizations that want to compromise your living standard just to make a quick buck.

Apart from these, here are a few common eligibility criteria:

  • The borrower must be between 21-65 years. The upper and lower limits might differ
  • Salaried individuals with specific years of work experience are preferred
  • Self-employed individuals with a net income of ₹20,000 need to provide documents to support their cash inflow
  • Must possess other KYC documents

Also, Read: Get a Personal Loan for Salary of Rs. 12000

Documents Required for Personal Loan with 20000 Salary

Prepare all your documents in advance to get the loan approved before their hour-long lunch breaks.

For Salaried Individuals

 Identity proof
  • Aadhar card
  • Driver’s License
  • PAN Card
  • Passport
Address proof
  • Electricity Bill
  • Water Bill
  • Passport
  • Aadhar card
 Income proof
  • Last six months’ bank statements
  • Salary slips
  • Form-16
 Work experience proof  Employment certificate


For Self-Employed Individuals

  Identity proof
  • Aadhar card
  • Driver’s License
  • PAN Card
  • Passport
 Address proof
  • Electricity Bill
  • Water Bill
  • Passport
  • Aadhar card
  Income proof
  • Last six months’ bank statements
  • ITR for the past 3 years
  • Audited balance sheet and profit/loss statement for the past three years
  • Business registration certificate

How to Apply for a Personal Loan on Rs. 20000 Salary?

You can either apply for loans on online portals or go to your nearest bank branch.

Online Loan Applications

Online loan applications are preferred when you want instant approval and quick loan disbursals. Most financial institutions offer same-day loan disbursals.

Steps to Apply for a Personal Loan with a Salary of Rs 20,000

Applying for a personal loan with a salary of Rs. 20,000 in India involves a straightforward process. Here are a general steps to help you through it. Please note that the specific requirements and process may vary slightly from one lender to another.

1. Assess Your Needs and Eligibility

  • Determine the Need: Ensure that a personal loan covers your financial requirements.
  • Check Eligibility: Lenders have specific criteria, including age (usually 21 to 60 years), employment status (salaried or self-employed with a steady income), and a minimum monthly income threshold. Credit score plays a crucial role too; a score above 750 is generally considered good.

2. Research Lenders

  • Banks and NBFCs: Look into various banks and Non-Banking Financial Companies (NBFCs) that offer personal loans. Consider interest rates, loan tenure, processing fees, and other charges.
  • Online Lenders: Many fintech companies and online platforms offer quick personal loans with minimal documentation, especially for smaller amounts. They might have higher interest rates but can be more flexible regarding credit scores. If you don’t know which lender would be the best fit for you. You can opt for a personal loan through Credmudra. We will match you with the right lender and ensure a smooth disbursement process!

3. Prepare Necessary Documentation

As mentioned above in the blogs, make sure you have all the right documents before applying for a personal loan.

4. Apply for the Loan

Online Application: Most lenders now offer an online application process. Visit the lender’s website or app, fill in the application form, and upload the necessary documents.

5. Loan Approval and Disbursement

  • Verification and Approval: The lender will verify your documents and creditworthiness. If everything is in order, your loan application is likely to be approved.
  • Disbursement: Once approved, the loan amount will be disbursed to your bank account, usually within a few hours to a few days, depending on the lender.

Offline Loan Applications

Offline loan processes are recommended to individuals who already have a long-term working relationship with the bank. This helps you negotiate a lower interest rate and a more flexible repayment plan. In some cases, the bank officials even increase the multiplier while calculating the loan amount.

The approval process is also faster as the bank already has access to your transaction and loan history.

Interest Rate on a Personal Loan with a Salary of Rs 20,000

Interest rates for loans available to individuals earning a monthly salary of Rs. 20,000 typically begin at 10.99% per annum. You can check out the table below for interest rates offered by our lenders:

mPOKKET0% to 48.0% per annum
CASHe2.50% per month
MoneyTrap1.08% per month onward
Fibe24.0% to 30% per annum
ICICI Bank10.75% to 19.0% per annum
Bajaj Finance11.0% to 39.0% per annum
HDBC Bank10.50% to 24.0% per annum
Axis Bank10.49% to 22.0% per annum
Kotak Mahindra Bank10.99% per annum onward
IDFC FIRST Bank10.49% to 36.0% per annum

Also, Read: How To Get A Personal Loan On Aadhaar Card?

Loan Repayment Procedure for Personal Loan on 20000 Salary

Remember, having an effective repayment plan not only builds the loan provider’s confidence but also helps you plan your repayment schedule. Let’s visualize the repayment schedule for various tenures.

Loan Amount  Interest Rate (p.a.) Tenure (months) EMI (Rs.)
 ₹2,00,000 11% 12 17,676
   24 9,322
   36 6,548
   48 5,169
   60 4,348

As you can see, the 4 and 5 years are the best options since they do not adversely affect your lifestyle. But, you can also opt for a shorter tenure if you factor in the annual raises, bonuses, promotions, and job switches during the loan period.


Paying a quarter of your monthly salary as EMI does seem daunting. However, personal loans help mitigate the stress of sudden cash crunches, medical emergencies and other unforeseen circumstances. Moreover, leveraging personal loans to gather wealth-generating assets also improves your financial standing.

Credmudra, a loan matchmaking platform, understands your problems and offers highly targeted solutions.

  • Minimum ₹9000/month income with lenient eligibility criteria.
  • Pre-underwriting services for individuals with low credit scores.
  • Minimum documentation during the application process.
  • Flexible repayment tenure ranging from a few weeks to 5 years

But, the best part is that Credmudra connects you with multiple loan providers to choose the one with the lowest interest rates.

Looking for an instant loan of INR 20,000?

Sign up on Credmudra and get started.


1. How much personal loan can you get with a salary of ₹20,000?

The loan range depends on the banks. However, most banks offer personal loans ranging from ₹50,000 to ₹3,00,000 for a ₹20,000 salary.

2. Is it easy to get a personal salary of ₹20,000 salary?

Yes, with the right documentation and a good credit score, you can easily get personal loans with ₹20,000 salary.

3. How long does it take to receive a personal loan?

Most personal loans are approved and disbursed within 24-48 hours on Credmudra.

4. What is the repayment term for a personal loan?

The maximum repayment term for a personal loan is 5 years. You can either choose a shorter repayment term or opt to foreclose the loan by making larger EMI payments.

5. What is the interest rate for a personal loan with ₹20,000 salary?

The interest varies depending on the interest amount and repayment terms.

Also, Read: I Need 1000 Rupees Loan Urgently


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