A Comprehensive Guide to the Documentation Process in Personal Loan Accounts

1. Proof of Identity

Identity proof is required for a personal loan to verify the details you have provided to the lender. This is crucial as lenders may want to avoid the risks of loan defaults. A few ID-proof documents include:

●       PAN card

●       Aadhaar card

●       Voter’s identity card

●       Driver’s licence

●       Passport

2. Proof of Residence

Residential proof is required when availing a personal loan to check if you reside at the address you have mentioned on your loan application. This process is followed as per the Reserve Bank of India’s KYC mandates.

Some address-proof documents include:

●       PAN card

●       Aadhaar card

●       Voter’s identity card

●       Passport

●       Utility bills such as telephone bills, gas bills, etc.

3. Proof of Income and Employment

Income proof is required for a personal loan to verify your capability to repay the loan based on your income. Income and employment-proof documents include:

●       Bank statements for the last 3 months

●       Salary slips for the last 3 months

●       Profit and Loss statement in case of self-employed professionals

●       Income tax returns for self-employed individuals

4. Photographs

You are also required to submit 2 latest passport-size photographs along with your supporting KYC documents when applying for a personal loan. This helps lenders verify the genuineness of the loan applicant.

Eligibility Criteria for Availing a Personal Loan

Checking the personal loan eligibility criteria is essential to determine if you meet the required parameters for securing an instant personal loan. Check out a few eligibility criteria here.

●       You need to be an Indian national

●       The minimum age requirement is 21 years

●       The minimum monthly income should be ₹15,000 (may vary according to the lender)

●       You are required to have a minimum work experience of 2-3 years (may differ from one financial institution to the other)

●       Your credit score should be 650 or above (some may insist on a score of 750 or above)

●       If you are a new borrower, you need to have an NTC (New to Credit) score above 150

●       You can apply for a loan if you are a salaried employee in a public or private firm or a self-employed individual

Remember that the aforementioned criteria may differ based on the lending institution. Be it credit score, work experience or minimum monthly salary requirement, you need to check with your lender before availing a personal loan.

Process of Availing a Personal Loan

Here are the steps for availing an instant personal loan.

Step 1: Check the eligibility criteria to see if you meet the required parameters

Step 2: Assess the personal loan interest rates and loan tenure to check if they suit your requirements and affordability

Step 3: Compute the EMI of the personal loan using a personal loan EMI calculator to get an accurate estimate of your monthly instalment

Step 4: Proceed further to apply for a personal loan with a preferred lender

Step 5:  Fill out the personal loan application form via online or offline mode

Step 6: Keep the required personal loan documents handy and submit them after getting loan approval

Step 7: Wait for the disbursement of the loan and receive funds in your bank account after approval

Reasons to Avail a Personal Loan

Check out the reasons for availing an instant personal loan.

1. Competitive Interest Rates

A notable feature of an instant personal loan is that you get these loans at attractive interest rates. With lower interest rates, your overall personal loan cost decreases. This helps you save a significant amount of money compared to higher interest rate options.

The lower the instant personal loan interest rate, lower the monthly payment. This helps in easing the financial burden, protecting you from the accumulation of loan interest and reducing the chances of getting into a debt trap.

2. Instant Availability of Funds

Yet another benefit of getting an instant personal loan is that you get access to quick funds whenever you require them to cover your financial obligations. The instant availability of funds can help you manage unexpected situations like medical expenses, car repair, an EMI payment and much more.

Hence, these quick funds can be utilised for multiple purposes, as there are no end-use restrictions on an instant personal loan.

3. Flexible Repayment Tenure

The flexible instant personal loan repayment tenure offers great advantages, which include the ability to customise the loan repayment schedule according to your affordability and preferences. With an instant personal loan, you get a range of repayment tenure options.

You can choose a longer loan repayment tenure to get the loan amount divided into small monthly instalments. This significantly reduces your monthly repayment obligation and protects you against excessive financial strain.

4. High Sanction

Nowadays, you get a high instant personal loan amount to cover any unexpected financial obligations or meet any other requirements. By getting a substantial loan amount, you can avoid the need for getting multiple loans or resorting to other ways of getting funds.

A significant amount allows you to cover considerable expenses, simplifies your debt consolidation, enhances your negotiating power and offers higher financial security.

5. Simple Application Process

Another attractive feature of an instant personal loan is that the loan application process is quite simple. It includes some simple steps, and you can avail a loan from the comfort of your home. With easy-to-follow eligibility criteria and minimal documentation, getting this loan involves a straightforward process.

Most instant personal loan lenders provide you with the option of choosing the mode of your application. You can choose to submit the loan application online or visit the nearest branch for in-person interaction with the representatives of the financial institution.

Now that you have insight into the personal loan documents you need on hand and how to submit them, you can proceed with your instant personal loan application confidently. Making sure the documents are up to date and correct increases the chances of getting approval on your instant personal loan.

Moneycontrol Journalists are not involved in creation of this article.