Formerly, the process of obtaining a loan was highly demanding. Visiting a physical bank branch, filling out piles of paperwork, and possibly interacting with a manager are all necessities. Today, however, most loan applications are submitted digitally, making the procedure much more straightforward.
Depending on the lender, you may only need a few essential pieces of documentation to submit your loan application. While your individual experience may vary, this article will cover the questions you may expect to be asked by lenders during the application process and provide advice on how to answer them quickly. We have compiled a list of personal loan documents required to make the loan application process a breeze. Proceed with reading!
What is a Personal Loan?
An individual takes out a consumer loan for non-commercial or non-business purposes, such as medical, educational, vacation, or home improvement expenses. A personal loan is a loan taken from a bank or financial institution for a purpose other than the institution’s general business purposes.
Personal Loan Documents Required
To apply for a personal loan as an individual, you will need the following items:
Income Proof
Bank statements from the past six months from both an Indian and an international account; a salary certificate (in English) or recent pay stubs;
Address Proof
PAN Card, Driving Licence, Utility Bills, Bank Statement, or Ration Card
Employment Proof
Letter of Employment, Employment Contract, HR Email Address, Government Issued Photo ID, or Certificate of Employment Status (for NRIs working in the Middle East or employed in the Merchant Navy)
Identity Proof
Identity Document (PAN Card/Aadhar Card/Voter ID/License) Driver’s A W-2 form is a certificate that an employer issue to an employee after he has withheld taxes from the employee’s paycheck. All bank statements from the past three months (where salary is credited) And Photographic ID Size
A Personal Loan Application’s Documentation Is Important
You can speed up the loan process by supplying the necessary personal loan documents required to the lender. Banks and NBFCs evaluate your documents to determine your creditworthiness as a borrower. The personal finance industry has seen considerable technological developments, so you may only need to furnish a small amount of paperwork when applying for a loan. However, keep these records available if your lender requests additional information about you.
Your loan application may be declined if any documentation is incomplete or inaccurate. Necessary as they are, if the loan documents have any flaws, they must be fixed so that the borrower doesn’t have any problems getting a personal loan.
Some Common Terms For Personal Loans You Should Know Before Apply
Interest
Personal loans require borrowers to pay back the borrowed funds plus interest, the lender’s fee for lending the borrower money. Each monthly payment includes principal repayment as well as an interest payment.
Eligibility
Any loan you would be interested in will likely have specific requirements to be approved by a bank or other financial organization. They establish these criteria to ascertain whether or not you can repay the loan. Employment status, credit history, loan security, and income will all be considered. An NBFC personal loan requires that you be employed or self-employed with a stable income to qualify. You will be able to get the loan you need once the financial institution agrees to all your eligibility criteria.
Processing Fees
A typical bank processing fee is 1% to 2% of the total loan amount. Some financial institutions, though, impose a flat fee for handling transactions. The overall loan cost rises as a result of these fees. A lower processing fee is preferable.
Loan Approval Process
The sanctioning loan officer makes the final decision, considering the criteria set forth by the bank or financial institution. Timeframes range from 48 hours to two weeks for the entire procedure. If the loan is approved, it will be issued by the bank within seven business days after all required paperwork has been submitted and verified.
Prepayment Fee
Getting a personal loan can help you get through a financial bind in the near term. When financial circumstances improve, a prepayment loan may be an option.
Your loan application may be declined if any documentation is incomplete or inaccurate. Necessary as they are, if the loan documents have any flaws, they must be fixed so that the borrower doesn’t have any problems getting a personal loan.
Conclusion
There are many sequences in which you might want a personal loan. However, the loan approval process can be slowed or even halted if you need the proper paperwork. That’s why it’s crucial to have the personal loan documents required on hand. To obtain a personal loan with no paperwork required.
