Personal loans have been one of the leading credit options not only for Indians but for people across the globe. The reasons are obvious; the benefits it entails makes this credit instrument an obvious choice in case of any planned or unplanned monetary needs.
But, to get a personal loan, or rather apply for it, you need to submit all the documents requested by the lender. Failing to submit these essential personal loan documents will result in delays and rejection in some cases.
So, read more about the papers you need to apply for a personal loan.
Documents Required for a Personal Loan
Here is a list of documents that a potential lender would need to get a personal loan, but to give you more clarity, let’s divide this section into two parts –
Documents Needed for Salaried Individualsย
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ID Proof
- Aadhaar card
- Passport
- Driving licence
- Voter ID card
- PAN card
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Address Proof
- Utility bills (electric bill, telephone bill, etc.)
- Aadhaar card
- Passport
- Driving licence
- Voter ID card
- Front page of the bank passbook
- Copy of rent agreement if you are staying in a rented house
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Income Proof
- Employee ID card or any other proof of employmentย
- Salary slips
- Form 16
- Income tax returns
- Bank account statements
Documents Needed for Non-salaried Individualsย
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ID Proof
- Aadhaar card
- Passport
- Driving licence
- Voter ID card
- PAN card
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Address Proof
- Utility bills (electric bill, telephone bill, etc.)
- Aadhaar card
- Passport
- Driving licence
- Voter ID card
- Front page of the bank passbook
- Copy of rent agreement if you are staying in a rented house
-
Income Proof
- Business profit and loss statement
- Company balance sheet
- Income tax returns
- Bank account statement
- Business registration papers
Along with all these papers, you need to submit recent passport-size photos. Furthermore, this list is tentative, and the actual one will depend on the lender’s needs. So, if the financial institution asks for any additional documents, you need to submit them.
Knowing the list of papers required to get a personal loan is only half the battle won. Along with this, you need to fulfil the eligibility criteria as well.
Personal Loan Eligibility Criteria
Here is an overview of the personal loan eligibility parameters –
Age: 21 to 65 years
Credit Score: preferably over 750
Monthly Income: As specified by the financier
Work Experience: For salaried individuals, at least 2 years, and for self-employed ones, at least 5 years in current business, 3 years for doctors
Nationality: Indian
You must also stay at your current residence for at least 1 year before the application.
Once these two aspects are sorted, consider a few more pointers before applying for a personal loan.
Top 5 Things to Check Before Applying for a Personal Loan
Besides arranging the personal loan documents and meeting the eligibility parameters, you need to check a few more points to ensure you are making the right decision –
Top 5 Things to Check Before Applying for a Personal Loan
Besides arranging theย personal loan documentsย and meeting the eligibility parameters, you need to check a few more points to ensure you are making the right decision –
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Interest Rate
The first thing to check here is the interest rate of a personal loan. Since it will determine the interest outgo, you need to be careful and find the best possible offer to lower your burden. In this regard, you can compare loan offers from various lenders and see which one offers you the best interest rate.
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Repayment Tenure
As the repayment tenure determines the EMI for personal loans, this is the second most important thing to review before applying. Typically, financial institutions can offer tenure of up to 72 months to pay off the personal loan, but in some cases, it can go higher. But that will depend on your credit profile.
You need to remember two things about the repayment period of a personal loan. First, a longer term will reduce the initial monthly instalments, but it will eventually increase the total interest outgo significantly and vice versa. Also, with a longer repayment term of an unsecured loan, you may have to bear a higher interest rate.
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Repayment Options
Along with the repayment term, you need to review the payment options of a personal loan. Here, you have to check whether the lender of your choice is offering the facility of part prepayment and foreclosure or not. Also, yearly EMI adjustment is another consideration here. Together, these facilities will help you pay off your debt quicker.
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Charges of a Personal Loan
Once the repayment-related matters are solved, you need to look out for the additional charges of a personal loan. This includes processing and legal fees while applying for the credit and any prepayment and foreclosure charges. Since these charges will accumulate and increase your total cost of borrowing, you need to review them first and then decide.
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Terms and Conditions
Last, you need to check the loan terms and conditions before applying. Go through the fine print of the credit and clarify all your doubts before applying. It will help you eliminate any confusion and avoid any future hassle.
You can apply now that you know all the details to take care of before applying for a personal loan. The financial institution will review your application and decide whether to approve or reject it. Either way, you will be notified, and if it goes through, a representative will call you to guide you through the remaining process.
Parting Thoughts
Applying for a personal loan in modern times has been easier than it was, especially with the online process. However, that does not mean you should go ahead and do it as you please. Instead, considering all the factors keeping the essential papers handy can help you make a more knowledgeable decision and avoid unnecessary delays.