Can I Get a Loan Without Proof of Income?

A Personal Loan is essentially an unsecured form of credit, which can be easily availed at any bank, a non-banking financial company (NBFC) or an online lender.

What makes this loan astoundingly popular amongst the masses is that once disbursed, the loan amount can conveniently be used on the borrowers’ own accord to meet a wide variety of expenses including those of medical, educational and leisure nature. The loan amount can even be used to consolidate other debts, to renovate one’s home or office, or simply to purchase new products or appliances.

It is this sense of freedom offered by this loan, which makes it much more sought-after than conventional forms of credit such as car loans, educational loans, and others.

A Personal Loan can be repaid in the form of equated monthly instalments or EMIs, depending on the interest rate which usually varies from 10.75% to 22%, as per the credit score of the borrower. Another important aspect that determines the EMI apart from the principal loan amount is the tenure. The tenure can be chosen by the borrower, and usually ranges from 12 to 60 months.

While a Personal Loan Application doesn’t often need to be accompanied with extensive documentation, most lenders and banks require proof of income of the borrower. Since the loan is not accompanied by collateral, the borrower’s income source is the only aspect which assures the bank their ability to repay the loan. More often than not, the following documents act as proof of income:

For Salaried individuals:

• Recent salary slips or current salary certificate
• Banks statement for the last 3 months
• The latest copy of Form 16
• Income taxreturns

For business owners and self-employed professionals:

• Income tax returns statement for the previous 2 years.
• The Computation of Income, Profit and Loss Account, Balance Sheet as well as an Audit Report by certified Chartered Accountant.
• Bank Statement for both currents as well as savings accounts for the last 1 year.

However, there are instances, when you may not have these documents to substantiate your income or sources of revenues. In such circumstances, it may become exceedingly difficult to get a Personal Loan.

So, does that mean you should lose all hope? Thankfully not. What you can instead do, is to look at the following alternative measures, and see if you can convince the bank to offer you the loan anyway:

1. Proof of Employment Offer

If you are between jobs and have resigned from one company with the aim of joining another, you can show the bank the offer letter of employment issued by the new company. This will assure the lender of your source of work as well as your ability to repay the loan. Since your new job will most likely pay you more than your past one, you will benefit from having higher eligibility concerning the loan amount.

On the other hand, if you enjoy stable employment, but your company refuses to issue a salary slip, you should find a copy of the offer letter published by your employer when you first got the job. This accompanied by your bank statement should prove to be enough to convince the bank of your financial stability.

2. Proof of Income from Previous Employment

If you are between jobs, for personal or professional reasons, but haven’t received any employment offer from the companies you are seeking employment from, you can furnish proof of income from your previous employer. This may be in the form of a salary slip or a salary certificate. It will help the bank analyse your projected revenue in the coming future, thus helping it assess your ability to repay.

3. Bank Statement

In case you happen to be a freelancer, and cannot furnish documents such as salary slip, salary certificate, or offer letter of employment, you can offer your bank statement to the lender. The report will showcase the income that you generate from different clients, thus indicating your financial prowess and flow of revenues. In this case, the transactions showing credited amount from the same client month after month will act as a brilliant proof of continued income.

4. Scanned Copy of the Cheque

If your company pays your salary via cheque, you can simply get it scanned and submit the same as a proof of income, along with other documents for a Personal Loan application.

Apart from the above measures, you can also rely on establishing a good rapport with the bank which holds your savings or current account, to offer you a documentation-free loan. To do so, not only should you have a friendly attitude while dealing with the various employees of the bank, but should also ensure that you maintain a respectable level of financial discipline. Moreover, you must ensure that you remain loyal to the bank, and don’t switch banks too frequently.

Once the bank knows and understands how you function and is assured of your self-control in financial matters, it would hesitate from offering you a loan, even when you are unable to furnish any substantial proof of income.

Yet another way to convince the bank of your creditworthiness is by paying your dues, such as Credit Card bills, locker rent and other charges in time. Your promptness in clearing such bills will help you enjoy a better shot at availing the much needed Personal Loan.

Of course, over and above all these measures, if you have a good credit score to your name, preferably 750 or above you can rest assured of getting your Personal Loan application approved, even when you don’t have an ideal proof of income to be enclosed with your loan application!

We bet, you are more confident than ever before and can now quickly get a Personal Loan, and enjoy the financial freedom that it will entail!

Also Read: Pre-Approved Personal Loan: All You Need to Know