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How Can Existing Debt Obligations Impact Your New Personal Loan Eligibility?


  • Don’t know whether you can get a personal loan as you are already paying loan EMIs and credit card bills?
  • If found eligible, how much can you borrow? Let’s find out!

When you are borrowing a personal loan from a bank or financial institution, the lender calculates your current obligations to find your repayment capacity. And the repayment capacity decides how much loan you can borrow. Besides current obligations, a personal loan is dependent on the income and credit score of an applicant. Your new personal loan limit will be decided based on your credit card payments and the existing loan EMI amount. In case you are already paying these debts, you should read this post and prepare yourself accordingly. Let’s get started!

Loan Amount

Your borrowed loan amount can be low if your credit card bills and current loan EMI consume a good portion of your monthly income. So, in that case, to get the required loan amount, you can add a co-applicant. How will it help you? Well, the co-borrower’s income and credit history will help you borrow the loan amount as per your need. And your new personal loan EMI will be shared with your co-borrower.

Interest Rate

The existing loan and credit cards not only affect your borrowed loan amount but it can also increase your interest rate. As you know personal loan interest rates are high compared to secured loans. But when your credit card bills are due and EMI for the existing loan is not getting paid on time, it might be a problem for you. Why? Because it shows that you are not a creditworthy individual for a personal loan and may default in payment. That is why in some cases the lender can also reject the loan request.

How to Manage Existing Loans and Credit Cards to Borrow a Personal Loan?

If you have existing credit cards and loans and don’t know how much personal loan you are eligible for. Then in that case, you should take the help of a personal loan eligibility calculator. Yes, this is an online tool that helps an individual to know what amount he/she is eligible for as per their monthly income and current expenses.

It gives a wider view to the borrower to manage all of his debt payment without the personal loan eligibility. So, how does a personal loan eligibility calculator work? The tool works in a mathematical formula and generates the loan amount using your income, current EMI, and other information. You just need to insert the details to find the eligible loan amount. Know how the tool works in the example below.

Example: Rita is 24 years old and has worked in a corporate office for at least 2 years. And the salary she earns per month is INR 50,000. Suddenly, a medical emergency arises in her family as her mother gets ill. She doesn’t have enough savings to meet the medical treatment, so Rita decides to apply for a personal loan. For a quick result, she takes the help of the personal loan eligibility calculator in which she enters the following details.

  • Enter the date of birth: 26/09/1996
  • Enter the monthly income: INR 50,000
  • Monthly expenses: INR 10,000
  • EMI payment for the existing loan: INR 10,000
  • Credit card bills: INR 5,000
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As per the estimation of the personal loan eligibility calculator, Rita can borrow a personal loan from INR 2 to 3 lakh. But this is just an estimation, the actual amount could differ.

Does My CIBIL Score Affect the New Personal Loan Interest Rate?

Yes, your current CIBIL score may help you negotiate with the lender. How? Because your repayment history will ensure the lender that you are a creditworthy applicant for the personal loan despite the current loan EMI and credit card obligations. And an ideal CIBIL score that will help you get a low personal loan interest rate is 750 or above. How is the CIBIL score decided? Your CIBIL score is dictated based on the type of loan you borrow and the payment you have made in the past for your credit cards or loans. The CIBIL score ranges from 300-900. And it can be high if you pay the loan on time and use your credit card smartly.

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    HDFC Bank10.75% - 21.45%
    ICICI Bank10.75% - 17.50%
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    Standard Chartered Bank14.00% - 21.00%
    Tata Capital10.99% - 19.75%