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Personal Loan Salaried VS Self Employed

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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.
 

  1. 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. 
     
Bank Name Type of Applicant Age bracket
ICICI Bank Salaried 23-58 years
ICICI Bank Self- employed 28-65 (For Doctors, the minimum age limit is 25 years)
Axis Bank Salaried 21-60 years
Axis Bank Self-employed 24-65 years

 

  1. 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:

 

Bank Name Applicant Type Income criteria
ICICI Bank Salaried 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
ICICI Bank Self-employed Minimum turnovershould be of Rs. 40 lakhs for non-professionals; while for professionals, the minimum limit is Rs. 15 lakhs
Indusind Bank Salaried Minimum net monthly income should be Rs. 25,000
Indusind Bank Self-employed Net annual income post tax should be Rs. 4.8 lakhs
Kotak MahindraBank Salaried Minimum net monthly income should be of Rs. 25,000
Kotak Mahindra Bank Self-employed Minimum annual turnover should be:

 

  • Rs. 50 lakhs for service providers
  • Rs. 1 crore for manufacturers
  • Rs. 2 crores for self employed businessmen

 

  1. 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:

 

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

 

Kotak Mahindra Bank Salaried
  • Should have minimum 2 years of work experience
  • Should have spent a minimum of 1 year in the same city.
Kotak Mahindra Bank Self-employed
  • Should be in business for last three years continuously
  • Should show a cash profit for the last two years.

 
 

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

 

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

     

    • Bank statements of the last 6 months
    • Qualification proofs (For professionals such as Doctors, Lawyers, CA etc.)
Salaried
  • Pay slips of the last three months
  • Salary Account statements of the last 6 months
  • Recent Form 16 with Income Computation

 

Apart from these, the documents that are common to both the categories include Address proofs, Identity Proofs and acknowledged Income Tax Return.
 

  1. 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.

Being well aware of all the factors mentioned above can minimize your chances of missing out on a good deal. So visit Paisabazaar.com to compare, buy and save.

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