How Banks Decide (2026)
- •Banks compute eligibility two ways — FOIR (EMI capacity) and income multiplier — and sanction the lower of the two.
- •Your CIBIL score decides your rate: 750+ gets ~10.5% in 2026, while 650–699 pays 16%+ and below 650 is usually declined.
- •For personal loans, banks typically allow only ~50% FOIR (45% for self-employed) since the loan is unsecured.
- •Maximum tenure is usually 5 years, which caps the amount your EMI capacity can service.
The Real Problem This Solves
Type "personal loan eligibility" anywhere and you get a fantasy number — usually 24× your salary with no questions asked. Then the bank sanctions half of it, and you have a hard credit enquiry on your report for nothing.
This calculator runs both checks the bank runs — FOIR and the income multiplier — adjusts them for your CIBIL band and employment type, and shows you the lower figure, because that is the one that gets sanctioned. A realistic number before you apply protects your credit score.
The Two Methods, Worked Out
Method 1 (FOIR): max EMI = net income × 50% − existing obligations, converted into a loan at your rate and tenure. Method 2 (multiplier): a cap of roughly 24× net monthly income, scaled down for weaker credit bands. The bank approves min(Method 1, Method 2).
Example: Sneha earns ₹60,000 net with a ₹5,000 card EMI and a 750+ score. Method 1: EMI room = 60,000 × 0.50 − 5,000 = ₹25,000 → at 10.5% for 5 years that services about ₹11.6 lakh. Method 2: 24 × 60,000 = ₹14.4 lakh. Her realistic sanction is ₹11.6 lakh — the FOIR figure, not the 14.4 lakh most calculators would show her.
| CIBIL Band | Typical Rate (2026) | What It Means |
|---|---|---|
| 750+ | ~10.5% | Best pricing, fast approvals, full multiplier |
| 700–749 | ~13% | Approved, but costlier; slightly lower cap |
| 650–699 | ~16.5% | Smaller sanctions, higher scrutiny |
| Below 650 | 20%+ | Most banks decline; NBFCs only, at steep rates |
Frequently Asked Questions
Why did the bank sanction less than online calculators showed?
Most calculators show only the income-multiplier figure. Banks also run the FOIR check — your actual EMI room after existing obligations — and sanction whichever is lower. This calculator shows both, so the number you see is the number you get.
Does checking my own CIBIL score reduce it?
No. Checking your own score is a "soft enquiry" and has zero impact. Only lender-initiated "hard enquiries" (actual loan applications) affect your score — which is exactly why you should know your eligibility before applying.
How fast can I move up a CIBIL band?
Paying credit cards in full (not minimum due), keeping card utilisation under 30%, and zero missed EMIs typically move a score 20-50 points in 4-6 months. Moving from the 700-749 band to 750+ can cut your rate by around 2.5%.
Salaried vs self-employed — why the difference?
Salaried income is predictable, so banks allow a higher FOIR and multiplier. Self-employed applicants are assessed on ITR income and usually get 45% FOIR and a lower cap, and need 2-3 years of returns.
Before you apply, check one more number
Your debt-to-income ratio is the first thing the credit team looks at. Make sure it's in the healthy zone with our DTI Ratio Calculator.
Check Your DTI Ratio →