Calculating Personal Loan Eligibility: Manual and Online Calculator Methods



Securing a personal loan can provide financial flexibility for various needs, from funding education to covering medical expenses or consolidating debts. Before applying for a personal loan, it’s important to determine your eligibility to ensure a smoother application process and increase your chances of approval. In this article, we’ll explore two methods for calculating personal loan eligibility: manual calculation and using an online calculator.


Manual Calculation Method:

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Calculating your personal loan eligibility manually involves a step-by-step approach to assess your financial capacity. Here’s how you can do it:


  • Assess Your Income: Begin by calculating your monthly or annual income. Include all sources of income, such as salary, rental income, investments, etc.


  • Calculate Fixed Obligations: Calculate your existing fixed monthly obligations, including any ongoing loan repayments, credit card bills, rent, and other commitments.


  • Calculate FOIR: FOIR (Fixed Obligations to Income Ratio) is a key factor in determining personal loan eligibility. The FOIR limit varies among lenders, but it generally ranges from 40% to 50%. Calculate your FOIR using the formula: FOIR = (Fixed Obligations / Monthly Income) x 100.


  • Determine Loan Amount: Subtract your FOIR from 100 to get the percentage of your income available for the new loan. Multiply this percentage by your monthly income to determine the maximum EMI you can afford.


  • Calculate Eligible Loan Amount: Use the EMI formula (Loan Amount x Interest Rate x (1 + Interest Rate) ^Loan Tenure) / ((1 + Interest Rate)^Loan Tenure – 1)) to calculate the maximum loan amount you’re eligible for, given the EMI you can afford.


Using an Online Calculator:

  • Online personal loan eligibility calculators offered by various financial institutions provide a quicker and more convenient way to estimate your eligibility. Here’s how to use them:



  • Enter Details: Enter your basic information, including your monthly income, existing EMIs, and other relevant details as requested.


  • Submit Details: After entering the required information, submit the details for calculation.


  • Receive Results: The calculator will provide you with an estimate of your maximum eligible loan amount based on the information you provided.


  • Factors Influencing Eligibility:


  • Keep in mind that personal loan eligibility is influenced by various factors beyond income and fixed obligations. These factors may include your credit score, employment history, age, and relationship with the lender. Different lenders have different eligibility criteria, so it’s important to research and understand their requirements.



Calculating personal loan eligibility manually or using an online calculator can give you a rough estimate of the loan amount you might be eligible for. However, the final loan approval will depend on the lender’s assessment and verification of your application. It’s advisable to consult with financial advisors or loan officers to get a comprehensive understanding of your eligibility and explore suitable loan options based on your financial goals and circumstances.

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