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Author: admin | Category: Calculator Car Loan | Date: 18.08.2015

Manish Chauhan 51 CommentsToday you are going to learn how much home loan amount you are eligible for.
There are several other kind of loans like Personal loans, Car Loan, Education loans – but out of all the loans, home loan is the biggest ticket size loan and takes longer to pay off. I have recorded a full video on this topic which you can view below or on this direct link on youtube. So the bank will assume that the savings per month is 50% of Rs 80,000 , which is Rs 40,000.
Now bank will do the reverse calculation and find out how much EMI is required to pay off Rs 1 lac loan using the standard interest rate and tenure.
Now they find out how much loan Ajay can handle if he can pay Rs 32,000 EMI per month , considering Rs 998 is required to pay Rs 1 lac loan.
Assume that Ajay had an existing personal loan for which he was paying Rs 10,000 EMI per month. Important Note – It depends on the bank on how much % saving they assume a person does. Now lets look a little deeper into some of the core factors which affect your loan eligibility.
The amount of loan you are eligible for depends directly on your income.This is one single factor which impacts your home loan eligibility to the greatest extent. A person earning Rs 1 lacs has higher chances of affording Rs 30,000 EMI , compared to a person who earns just Rs 40,000 . Now if you are salaried employee, your income is assumed to be more stable than a person who is self employed or into a business. A lot of banks do not consider the LTA , HRA and medical allowances you get from the company, so they will deduct those amounts from your yearly take home.
For a self Employed Professionals, along with the ITR’s for past 3 yrs, banks also require Profit and loss statement along with Balance sheet certified by a CA for last 3 yrs.
So if a person is into jobs which are well paying and which are considered stable like Software Engineers, Banking jobs etc (which are white collar jobs), then the person is eligible for a higher loan amount. A lot of banks (especially PSU and cooperative banks) still look at your past relationship very seriously.
Almost all the banks categorize various big companies into A,B,C category and offer different interest rates to their employees. So you understood how the loan eligibility is calculated and some factors which impact it, so now lets see some of the actions you can take to increase your loan eligibility. If you have any existing loan which is about to complete, then better pay it off completely.
But right now your bank will see that you just have Rs 25,000 in hand to afford additional EMI , and you will have a loan eligibility of only Rs 25-30 lacs, where as in reality you know personally that you can afford much more EMI given a chance.
So in this case, its always a better idea to arrange for money from somewhere else and pay off the personal loan fully and that will free your EMI there, and you will be left with full Rs 40,000 in your hand. For example, imagine you have another home loan for which your tenure left is 4 yrs and your EMI is 15,000 .
You should also mention to the banks if you get additional bonus or perks from your employer or if you have any other source of income like rental income, interest from deposits or some other business income apart from your regular income. When I applied for the loan , the bank responded that per RBI rules , since I have two houses in my name I can not apply for a home loan to construct the third house. Could you let me know if the actual interest paid on the housing loan (Home Invest) is allowed as deduction while filing the return? Dear Manish, Can i add my father’s pension amount as source of income to improve my eligibility?
I work as an artical assestent at a chartered firm for 3 years and i am receiving stipend(salary) of Rs. Calculating how much you should spend on a new or used car is a very important step in budgeting and financial planning. The problem for most people is they usually end up replacing their current car unexpectedly without saving up an adequate amount of money in a car replacement fund. But What About 0% Interest Loans, are they a Good Idea:  In my experience, 0% interest loans are usually offered in lieu of taking a cash rebate discount up front.
Another financial rule of thumb when it comes to buying your next car is that the total value of all your vehicles (cars, boats, atvs, motorcycles, RVs, etc,) shouldn’t add up to any more than half your annual income. If you have $30,000 worth of vehicles sitting in your driveway, chances are next year the value of those vehicle will be around $25,000.


In a perfect world, we’d all buy the least expensive cars possible that fulfilled our transportation needs (but we know this is not reality). Keeping that in mind, you still need to have a reasonable monthly payment especially if you take the high road getting a shorter term auto loan (48 months or less).
Subscribe to our mailing list and get our latest debt elimination and personal finance articles delivered to your email inbox. I will show you how banks calculate your home loan eligibility and what are some of those factors which can impact your loan eligibility. Just because you are earning Rs 1 lac a month, does not mean that you can take a Rs 50 lacs loan. While this article is true for all kinds of loans, still we will focus on home loan eligibility in this article. Assuming that the bank takes 20 yrs tenure and interest rate of 10.5% , the EMI required to pay Rs 1 lac loan per month comes to Rs 998.
There are various banks which use different formulas and calculations, but all of them will revolve around this same logic I explained about. In the example above I have taken 50% as the assumption, but some banks might take it as 40% or even 35% .
Some lenders might not use all the factors, but still its a good idea to understand how its related and do something about it. Its very simple, higher your income, higher is the chance of you being able to pay the bigger liability.
Its more easier for a salaried person to get a loan compared to a self employed person earning Rs 1 lac a month for obvious reasons. In reality your income can be anything, but what really matters is your income on papers, which is ITR returns you have filed over last 2-3 yrs. Imagine that he has a bad record in past and he had not paid his past EMI’s on time and his overall credit score was bad, then it might happen that the bank agrees to only approve Rs 10-15 lacs of loan instead of his original 40 lacs loan. However certain jobs like BPO sector jobs , running your own shop, Insurance Agent have lower loan eligibility because the income is uncertain or the chances of losing a job is higher. So if you were planning to take a loan for 10 yrs, and assume that your loan eligibility came to Rs 20 lacs, if might happen that it goes up to 30 lacs if you are ready to take a 20 yrs loan.
This is because in that case, your monthly savings will go up and that will increase your loan eligibility . You have to think about how you can show the bank that you have a higher amount available with you. Now if you cant prepay it fully, what if you can increase the tenure to 10 yrs , may be the EMI comes down to Rs 9,000 ? In some banks this thing might not be of any use if they do their calculation on outstanding loan.
If you include your spouse or parents as additional loan applicants, then your overall loan eligibility will go up because now there is more income to support that loan.
Even if you mention that your spouse also earns some additional income which can be used later, then it might help sometimes.
The house that I have in my native place is very old and I decided to construct a new one without demolishing the old one. A car dealer may only provide you with the total price and monthly payment for your new car, but a loan calculator can allow you to determine the actual interest rate for your loan.Who Establishes the Interest Rates of Loans?
Paying back your car loan over 5 or 6 years will keep your monthly payments low but chances are you’re spending way too much on a new or used car if this is the only way you can keep the payment within your monthly budget. At the end, I am also going to share some tips you can take to increase your home loan eligibility. Its always based on a formula and is calculated based on some formula and logic, which we are going to see today. Note that a lot of banks will ask for your salary slips for past 1 yr and 3 yrs of IT returns, and bank statement for atleast 6 months. A lot of people do not disclose their full income and pay less taxes, Its going to directly impact their loan home eligibility.
Check with the bank about it and you might get a slightly less interest rate, which can matter a lot on long term.
So if you have any other EMI going on and you cant prepay it fully, then at least you can increase the tenure of that other loan, which will decrease the EMI part and that would leave you with more money in your hand each month.
This particular point is not going to increase your loan eligibility, but at times this can help you get your loan approved.


I have taken a homeloan for the house I presently live and my wife is a co owner and borrower for this property .
I want to buy a home after 3 years or later and if i file my ITR return for this 3 years showing my annual income around Rs.60000 (only stipend income) and after 3 years if i get a job having a package of Rs. Think for a minute and trust me, you will yourself realise that calculating someone’s loan eligibility can be very easy.
As a thumb rule, banks in India assume that you are able to save anywhere from 40%-50% of your in hand income. This is to calculate and get an idea of your overall cash flows and what are your spending patterns.
A person in his 30’s can pay the loan for next 30 yrs, but a person who is 50 yrs old will retire at 60 and has just 10 yrs in hand and in that case, he can get a loan for lower amount compared to more younger person. But you have an existing personal loan for which you are paying Rs 15,000 per month EMI and that leaves you with remaining Rs 25,000 only. Now imagine that you have Rs 1 lac in outstanding for that personal loan and its going to complete in next 8 months, after which you will have full 40,000 with you for paying home loan EMI . Currently i save my stipend income in mutual funds, rd & atal pension for home loan purpose, please suggest me. On the other hand, if there’s too much cash in supply, the prices can increase too quickly.For this reason, central banks establish interest rates as a way to better manage price movements. Borrowing money with high interest rates costs more money overall, therefore the economy tends to slow down and prices drop.
Also, higher interest rates make people want to deposit their cash in banks, which in turn reduces the amount of available money. It’s easier to get credit and make monthly payments with lower interest rates, but also serves to encourage economic growth in the end.
In general, central banks lend money out to commercial banks at a predetermined rate that the board thinks will keep prices more stable.How Banks Determine Interest Rates Most commercial banks primarily base their own interest rates off of those the central bank uses, while adding a profit margin for themselves. Even though banks can charge whatever rates they like, banks that are competing for your business pay close attention to what other banks are doing in terms of loaning out money.
This rate is important since banks use it across the board in order to borrow money from the Federal Reserve. A prime rate is a special rate that banks often use regarding the ideal banking customer that has a strong payment history and credit score. Other factors that banks take into consideration include the level of inflation, the loan market trends across the country, and the level of stock market trading.
All of these factors are crucial to the livelihood of the economy.Many kinds of loans tend to base their interest rates according to a certain indicator. For example, mortgages get their base rate from the primary interest that’s charged on Treasury bills, which are government-based securities the government auctions off in order to get revenue.Banks decide how much money to charge their customers based on a few fundamental aspects. For starters, the bank takes into account the overall expense that the bank incurs in order to raise the funds to lend out, whether these funds are obtained via certain channels or customer deposits. Next, the bank considers how much it will cost to process the loan, including payment and application processing, in addition to a percentage of all their operating costs as well. Also, the bank will determine a profit margin based on each loan that will give the bank a decent return.How to Get the Ideal Interest Rate Without a doubt, the best way to get a great interest rate is to maintain a good credit score.
For instance, put up significant collateral in order to obtain a substantial down payment or loan. Also, you can decrease a loan rate by utilizing several services, such as savings, checking, mortgages, or brokerage from the same bank in order to receive a discount. You can often negotiate for better loan terms if the economy is somewhat slow.No matter where or how you get your loan, be very aware of the interest rate of the loan and check it with the use of a convenient loan calculator for best results. She is a contributing writer to this and other blogs and also writes email newsletter articles, press releases and web content. Prior to her writing career, Natalie worked in various fields including real estate, equipment leasing and banking. 10 Tips for Better Time Management 15 Ways to Save on Everyday Household Essentials 10 Best Personal Budgeting Tools With Reviews Federal Tax Rates and Brackets for 2016Popular PostsHow Much Is Car Insurance?



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