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PERSONAL LOAN SALARIED VS SELF EMPLOYED



Personal loans are the most suitable option, when it comes to handling an urgent financial need. Whether you are salaried or a self-employed individual, a flexible borrowing option, such as personal loan, can solve your temporary liquidity problem. There are a number of key factors such as income level, repayment capacity, credit and employment history that determine your eligibility and interest rate for the loan. However, the exact cut-off limits for the above factors vary for self-employed and salaried individuals. Here’s a low down on how these factors vary while availing a personal loan.


Age criteria:

Each bank has its own predefined minimum and maximum age criteria for availing a personal loan. These age limits are usually lower for salaried individuals than self-employed ones.

  • ICICI Bank (Bank Name) - Salaried (Type of Applicant) - 23 to 58 years (Age bracket)

  • ICICI Bank (Bank Name) - Self employed (Type of Applicant) - 28 to 65; For Doctors, the minimum age limit is 25 years (Age bracket)

  • Axis Bank (Bank Name) - Salaried (Type of Applicant) - 21 to 60 years (Age bracket)

  • Axis Bank (Bank Name) - Self employed (Type of Applicant) - 24 to 65 years (Age bracket)

Income Requirements:

Owing to the uncertainty associated with a business or practice, the minimum quantum of earnings is usually higher for a self-employed individual in comparison to a salaried individual. For example, the eligibility criteria of Bank vary as follows:

  • ICICI Bank (Bank Name) - Salaried (Applicant Type) - Minimum monthly income of Rs. 17,500 *Rs. 25,000 for residents of Mumbai and Delhi *Rs. 20,000 for residents of Chennai, Pune, Bangalore , Hyderabad and Kolkata (Income criteria)

  • ICICI Bank (Bank Name) - Self employed (Applicant Type) - Minimum turnover should be of Rs. 40 lakhs for non-professionals; while for professionals, the minimum limit is Rs. 15 lakhs (Income criteria)

  • Indusind Bank (Bank Name) - Salaried (Applicant Type) - Minimum net monthly income should be Rs. 25,000 (Income criteria)

  • Indusind Bank (Bank Name) - Self employed (Applicant Type) - Net annual income post tax should be Rs. 4.8 lakhs (Income criteria)

  • Kotak Mahindra Bank (Bank Name) - Salaried (Applicant Type) - Minimum net monthly income should be of Rs. 25,000 (Income criteria)

  • Kotak Mahindra Bank (Bank Name) - Self employed (Applicant Type) - Minimum annual turnover should be: Rs. 50 lakhs for service providers; Rs. 1 crore for manufacturers ; Rs. 2 crores for self-employed businessmen (Income criteria)

Additional Criteria:

The list of requirements for self-employed individuals is lot more stringent than that for salaried individuals. This is so because unlike salaried employees, self-employed do not have a fixed or regular source of income, and they might have major expenses. Few of the bank specific requirements for an individual availing a personal loan:

  • ICICI Bank (Bank Name) - Salaried (Applicant Type) - A minimum of 2 years of job experience; A minimum of 1 year of stay in the current residence (Additional criteria)

  • ICICI Bank (Bank Name) - Self employed (Applicant Type) - Should be in the current business for a minimum of 5 years. *This limit is of 3 years for Doctors; Self-employed individual should have a minimum of 1 year of liability relationship(Savings/Current account) with the bank or should have availed a loan (live or closed) in the past 36 months (Additional criteria)

  • Kotak Mahindra Bank (Bank Name) - Salaried (Applicant Type) - Should have minimum 2 years of work experience; Should have spent a minimum of 1 year in the same city. (Additional criteria)

  • Kotak Mahindra Bank (Bank Name) - Self employed (Applicant Type) - Should be in business for last three years continuously; Should show a cash profit for the last two years. (Additional criteria)

The eligibility criteria vary from bank to bank and are subject to change. So to be sure, it is advisable to check your eligibility before availing a personal loan at any given point of time.


Documents Required:

The key documents required to be submitted along with the personal loan application majorly remain the same across banks and types of applicants, however the few differences that exist include:

  • Self-Employed

  1. CA certified - Income computation of the last two years; Balance Sheet Profit and Loss Statement of the past two years

  2. Bank statements of the last 6 months

  3. Qualification proofs (For professionals such as Doctors, Lawyers, CA etc.)

  • Salaried

  1. Pay slips of the last three months

  2. Salary Account statements of the last 6 months

  3. Recent Form 16 with Income Computation

Rate of Interest offered:

As is known, interest rates vary according to the applicant’s profile. While for salaried individual, the reputation of the company they are working with matters, for self-employed, it’s their business’ domain that makes the difference. On similar income levels, the rates are usually higher for self employed in comparison to salaried individuals. However, self-employed individuals who share a good relationship with the bank can expect lower rates.


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ARE (Arms for Rural Entrepreneurs)

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