A Personal Loan at affordable rates can be a great option for anyone looking to meet their financial obligations without having to put up collateral. These loans are preferred due to the wide range of purposes they can meet, allowing borrowers to use the money for wedding expenses, home renovations, travel, or medical emergencies. Earlier, borrowers needed to visit the respective banks to get a loan. But today, they can apply from wherever they like.
If you’re a borrower, you can apply for a Personal Loan online, or by visiting your preferred bank’s nearest branch. You need to understand a few things about your loan before applying: your eligibility criteria, tenure and finally, the documentation required for getting your loan approved. Either online or in person, in most cases, you will need basic documents to present. This post will discuss the different types of documents required for Personal Loan approval and their significance.
Personal Loans are available to salaried and self-employed professionals depending on their credit standings. Even the Personal Loan rates offered will be similar if the credit ratings are akin. However, the documents needed for loan approval differ.
Documents required for salaried individuals
- Identity proof: One of the essential documents required for getting Personal Loan approval is identity proof. This document verifies the borrower’s identity. You can use your passport, Aadhaar card, voter ID card, driving licence, or PAN card. A valid identity proof ensures that the borrower is genuine and this will help the lender keep track of the borrower’s loan application.
- Address proof: An address proof serves the purpose of verifying the borrower’s residential address. Personal Loans are mostly made available to Indian citizens and documents like an Aadhaar card, passport, voter ID card, driving licence, utility bills or any other government-approved document can be submitted as proof of residence.
- Income proof: Income proof is one of the most crucial documents for getting loan approval. This document helps the lender determine the borrower’s income and assess their ability to repay the loan. The income proof may include the borrower’s latest salary slips for the last three months, bank statements for the last six months, Form 16 or Income Tax Returns for the last two years. Providing accurate income proof is essential to ensure a hassle-free loan approval process.
- Employment proof: Employment proof serves the purpose of verifying the borrower’s current employment status. This document may include an employment certificate from the current employer like an appointment letter, or any other document that verifies the borrower’s employment status. The employment proof helps the lender understand the borrower’s job stability and ascertain if they’ll hold their job and repay the loan.
- Photographs: Recent passport-sized photographs of the borrower are required as well. These photographs serve the purpose of filing the loan application and identifying the borrower.
- Loan application form: Even if borrowers apply for a Personal Loan online: a duly filled and signed loan application form is required for approval. This form contains essential details about the borrower, which includes personal information, income details, employment details and loan amount. It’s essential to fill out the loan application form accurately and provide all the required information to ensure a quick, hassle-free loan approval process.
Documents required for self-employed individuals:
- Identity proof: Self-employed individuals must also provide identity proof to verify their identity. The identity proof will be the same: a passport, Aadhaar card, voter ID card, driving licence or PAN card.
- Address proof: This is required for self-employed individuals and may be given through an Aadhaar card, passport, voter ID card, driving licence, utility bill or any other government-issued document.
- Income proof: Self-employed individuals must provide verifiable income proof that exhibits their ability to repay the loan. The income proof may include Income Tax Returns for the last two years, audited financial statements for the last two years, bank statements over the last six months, proof of business continuity proof and any other document that attest to the borrower’s income. It’s imperative to provide accurate income proof to the lender for smooth sailing of the loan application.
- Business proof: Self-employed individuals must prove their business is authentic and legitimate; and that they are the owners. This business proof may include a business registration certificate, GST registration certificate or any other government-approved document.
- Photographs: A couple of recently taken passport-sized photographs of the borrower are also required for loan approval. These photographs identify the borrower and help the lender sort out the application.
Are there any Online Personal Loans that Require No Documents
Certainly, a lot of banks and NBFCs do extend pre-approved facilities to a select base of pre-qualified customers who have previously banked with them. With digital technology enabling seamless instant financial options, eligible borrowers can get loans in seconds without documentation. This happens as the bank already has your data stored due to your previous application or from an active account. However, you still need to submit essential documents to get your loan approved.
When arranging documents for a Personal Loan, you have to ensure you have all the necessary documents, and they are accurate and up-to-date.
Different banks may have different document requirements, so check what your preferred lender needs before you start gathering them. Have them ready before you submit your application. This will ensure quicker loan processing, and hopefully, even quicker disbursal.