All About Personal Loans: Forms, Requirements, and Documentation
5 min read | 5 months ago
Personal loans are often considered a savior in times of unforeseen emergencies. This fact has been stated even in the recent Techmagnate report. The report stated that there is a sharp rise of 25.73% in searches related to personal loans. The report attributed financial emergencies to be one of the two primary causes of the surge. Unlike most other loans, personal loans are unsecured loans that require no collateral and have no specific purpose limitation. Therefore, personal loans are much easier to apply for emergencies. However, there are certain crucial aspects of personal loans that you must know if you are planning on applying for one. In this blog, we cover all those necessary details, such as filling out the bank loan application, document requirements, eligibility criteria, and more.
Understanding Loan Application Forms and Requirements
A loan application is the first and most important step for getting a loan approval. With the digitalization of banking services, you can apply for a personal loan online or through a physical bank branch. There is not much difference between filling out an online application form and filling out a physical form. In both cases, you must provide all basic details about your identity, financial records and other necessary details. Here is a breakdown of everything you must mention in an online application form.
1. Personal Details: Name, address, date of birth, etc.
2. Occupation Details: Job designation, employer details, income details.
3. Loan Details: EMI plan, tenure details, interest rate, loan amount, etc.
4. Document Detail/Checklist of Submitted Documents
Gather Necessary Documentation Such As ID, Income Proof, And Credit History.
The next step in applying for a personal loan is gathering and submitting the necessary documents. The bank assesses all documents submitted with the loan application to verify your identity, income details, and other existing financial liabilities. Here is a checklist of all the necessary documents.
Identity Documents
- One state or central government-issued identity proof, such as Aadhar, Voter ID and PAN Card.
- Some banks allow NRI applicants, but they must submit one copy of their passport.
Income Proof
Banks require a different set of documents for salaried and non-salaried applicants.
- Salaried: Form 16, Salary Slips, ITR Returns, Bank Statement showing salary credit.
- Non-salaried: ITR Returns, proof of business, business's profit and loss statement, and bank statements.
Credit History
Credit History or CIBIL Score has become growingly important for loan approvals. Your CIBIL Score can accurately show your financial behavior, such as previous loan payments and borrowing records. Therefore, it is important to maintain a good credit score by:
- Making on-time loan repayments
- Limiting credit line utilization
- Report discrepancies in the credit report
Fill Out Application Accurately And Completely
Not filling out the application form is one of the top reasons for loan application rejection. Therefore, filling out the application forms for personal loans online approval must be done with careful deliberation. One of the best ways to ensure that your application is complete and accurate is to gather all necessary supporting documents beforehand. In most banks, once you have submitted the application form, you cannot make any more changes. While filling out the application form, make sure to check and confirm the filled-in details with the documents. Once you have filled in the online application form, recheck all details and submit the form.
Submit Required Documents And Await Approval.
Once you submit your application form and all required documents, you must wait for the bank's approval. Most personal loans online approval time ranges from 2-7 days. Once the bank completes the document verification, you will receive an email or letter about your loan approval and offer details. Following this, you can move on to the next step, requesting disbursal of the loan amount.
Conclusion
Personal loans are becoming increasingly sought after for various purposes, including medical emergencies, organizing a wedding or paying college fees. However, with new RBI regulations and guidelines being introduced, the bank loan application process is getting stricter. Therefore, it's important to understand the application process. From filling out the application forms accurately to gathering and submitting the necessary paperwork, you must pay careful attention to each step. Maintaining a good credit score and being aware of eligibility criteria is also important, which can increase your chances of approval.
FAQs
1. Do I need to provide Form 16 for a personal loan?
Form 16 is mandatory for all salaried applicants applying for a personal loan. The documents must be submitted at the time of loan application for income proof.
2. Is it possible to get a personal loan without a salary?
Banks offer personal loans for both salaried and non-salaried individuals. Therefore, if you are self-employed with a source of income, you can apply for a personal loan at any time by providing your bank statement to show income credit.
About Unity Small Finance Bank
Unity Small Finance Bank is committed to making banking simpler and more accessible for everyone. Our services include Savings Account, NRI account, Current Account, Fixed Deposits, and Personal Loans offering flexible tenures and attractive interest rates. We also offer financing options like MSME Loans and Microfinance to support businesses and underserved communities. Learn more about Unity Small Finance Bank here.
