How the bank calculates loan eligibility?

4 February, 2015 5:25 AM

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How the bank calculates loan eligibility?

THE amount you can borrow depends on how much you can afford to repay per month in EMIs or Equated Monthly Instalments. What the bank calculates is 'how much you can afford to repay'.

THE amount you can borrow depends on how much you can afford to repay per month in EMIs or Equated Monthly Instalments. What the bank calculates is 'how much you can afford to repay'.

Step 1A bank will start by looking at your income statement (salary slips, tax returns, bank statements). It will calculate your total monthly income by adding up your salary, interest income, rental income, if any etc. All these details are available in your bank statement.

Step 1A bank will start by looking at your income statement (salary slips, tax returns, bank statements). It will calculate your total monthly income by adding up your salary, interest income, rental income, if any etc. All these details are available in your bank statement.

Since savings depend on a variety of factors like income level, lifestyle etc, there is a standard thumb rule of 30 per cent that banks apply to arrive at this number.

Source: moneycontrol.com

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