A personal loan can help you to meet a range of financial needs, such as home renovations, weddings, travel or other purchase commitments. However, before applying it is crucial to understand the documents required by private and public-sector banks, and digital lenders, as loan applications may not be processed or approved without necessary paperwork.
While documentation requirements may vary slightly across lenders, certain standard documents are commonly required to verify an applicant’s identity, address, income and repayment capacity. For online applications, a borrower is typically asked to upload scanned copies of these documents, while those applying offline is required to submit physical or soft copies. Keeping these documents ready in advance can help ensure a faster loan approval process.
List of documents needed for personal loan approval
Here is the list of some mandatory documents that an individual would need to apply for a personal loan:
- PAN card: Permanent account number () is one of the most important documents without which you can not apply for a personal loan. This is the document that taxpayers need at the time of filing income tax return (ITR).
- Salary slips: An applicant is also asked to submit their salary slips of the previous three months. This helps in determining the earning potential of the borrower. Typically, the salary slips also show proof of borrower’s employability and the current association with the organisation. The amount of loan that is approved is usually a certain multiple of monthly salary indicated in the salary slip.
- Aadhaar card: A person also needs to submit their aadhaar card and get an aadhaar authentication done. At the time of applying for loan, an OTP is sent to your registered mobile number as part of the process.
Who are eligible to apply for a personal loan?
Different types of lenders may ask for additional documents other than the ones mentioned above. Similarly, eligibility criteria to apply for a also differs from lender to lender. Here are some common conditions:
- The applicant must be employed and receive a monthly payment for their service in an organisation.
- Staff from both public and private limited companies are allowed to apply for a personal loan.
- Employees of the government sector, encompassing public sector undertakings (PSUs) and Central and local government bodies can also apply for a personal loan.
- Applicants are generally required to be between 21 to to 60 years of age to be eligible for a personal loan. Additionally, Axis Bank specifies that the borrower’s age at the time the loan matures should not exceed 60 years.
- The borrower should have a minimum net monthly income to apply for a personal loan, however this requirement differs from lender to lender. For instance, HDFC Bank requires applicants to have a net monthly income of at ₹25,000, while Axis Bank has set the minimum monthly income requirement at ₹15,000.
How to get a personal loan with ease?
- Check your credit score: A 750+ score increases the chances of getting a personal loan approved and you also get better interest rates.
- Compare loan offers: Always review interest rates, tenures, and charges from multiple banks, NBFCs, or digital lenders. You will be able to find all the relevant information on their respective websites.
- Calculate your EMI: Use a personal loan EMI calculator to find a repayment plan that suits your budget. You can easily find a personal loan EMI calculator on official websites of prominent lenders.
- Prepare required documents: Keep PAN, Aadhaar, salary slips, and address proof ready for verification.
- Apply online or offline: Submit your personal loan application through the lender’s website or at a branch.