Are you salaried and denied a personal loan by the bank? It might be due to discrepancies in documentation. Imagine the hassle you must have had in that case. Better be prepared than sorry! So while you may focus much on grabbing lower personal loan interest rates, losing focus on documentation can lead to application rejections. In this blog, we will discuss the personal loan documentation process.
What is a Personal Loan?
A personal loan is not limited to the type of credit salaried people get from banks and non-banking finance companies (NBFCs). It’s a beacon of belief when faced with an emergency and a goldmine for fulfilling wishes such as weddings, travel, education, or even vehicle purchases.
The loan comes at an interest rate ranging from 12–24% per annum on average. Depending on the interest rate, tenure and loan amount, lenders fix the personal loan EMIs you need to pay every month.
The approval, however, depends firmly on how smooth the personal loan documentation process remains in your case.
Personal Loan Documentation Checklist
Understanding the personal loan documentation checklist is no rocket science yet many commit mistakes and face rejections by the lender. What’s more, your credit score will dip by some points due to a rejection. It will further make it difficult to access a personal loan.
So, without any further delay, let’s talk about the checklist. The checklist will have documents verifying your identity, residence and income. This forms part of the lender’s Know Your Customer (KYC) norms.
Identity Proofs
Being assured of the customers’ identity allows lenders the confidence while extending a personal loan, which is unsecured in nature. An unsecured loan does not come with collateral a lender can fall back on should the borrower default on payments.
As part of identity proof, you need to submit a copy of any of the following documents.
PAN Card, Aadhaar Card, Passport, Voter ID, Driving Licence, Birth Certificate or any other government-approved identity proof documents
Residence Proof Documents
Knowing where you stay is another comfort for the lender when disbursing you a personal loan. For residence proof, you can submit any of the following documents.
Aadhaar Card/Passport/Voter ID/Driving Licence/Telephone Bill/Mobile Bill/Electricity Bill/Cooking Gas Bill
Income Proofs
Income is one of the crucial factors affecting personal loan eligibility. Your salary decides how much a loan you can pay comfortably through Equated Monthly Instalments (EMIs). So, lenders would likely screen you minutely on income. Through income documents, they can determine the flow of income, which is pivotal to spotless EMI payments. Lenders ask the following documents in support of income proof.
- Salary Slips for the Last Three Months
- Bank Statement for the Last Three Months
- Form 16 for the Last Two Financial Years
Recent Photograph
Banks and NBFCs also ask you to submit your recent passport-size photograph as part of their personal loan KYC norms.
Conclusion
Don’t let your ignorance of personal loan documentation lead to application rejections by the banks. Apply for a personal loan with confidence by submitting the above-mentioned documents. With this, we at zarooribaathai.in end today’s session. More insights coming your way.
