Do Instant Personal Loans Skip Any of the Processing Stages to Disburse Fast?
The rapid penetration of digital lending has revolutionalised the way financial products are serviced in the country today. While it used to take a few weeks, if not months, to get approved for a Personal Loan just a decade ago, processing of unsecured loans is impressively snappier and hassle free in 2020.
Let’s dig deeper and find out how Personal Loan processing has changed over the years. Why Online Personal Loans are so fast? What has prompted such fast disbursals? Have lenders reduced the numbers of steps to approve of loans?
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We will try to peek into the process of approving Personal Loans in India.
First things first, before initiating the application process, the lender expects the borrower to meet the Pre-Qualification standards. It assesses if the applicant is an eligible prospect for borrowing or not. Each lender has its specific lending eligibility requirements which will include a minimum threshold for age, income and credit rating standard.
Conduct this primary assessment on the basis of lender’s basic requirements prior to starting the loan application. The other eligibility factors will also vary across the lenders. For instance your existing bank may not require too many documents to proceed with a loan application, as they already have your KYC documents. Likewise instant loans on Aadhaar & PAN are also and take considerably low turnaround time.
The standard loan processing stages for Personal Loan are discussed below:
4 Stages of Processing Personal Loans
Step 1: Loan Application
The process to a loan application begins with filling of an application form of the lender. You can access the form either by visiting the branch on through the website. Generally a loan application forms are detailed ones and requires you to fill your identity details, address, and employment details. In its newer avatar you can also fill the same through your smart phone.
The data collected in this step should pass through primary eligibility assessment for processing of the loan application. The parameters to assess the eligibility vary across the lenders and thus loan application forms for banks and online app-based lenders can vary greatly.
For regular Personal Loans from banks, you will be required to possess at least 700 CIBIL Score, on the other hand instant Personal Loans like Cashe are available to borrowers with no credit history. You do not require a credit score to obtain loan from these platforms.
They have framed their own credit assessment requirements which involve factors such as assessing social credibility via AI & special algorithms. They will require you to share your online social media accounts to proceed with application.
Step 2: Document Submission
Whether you apply for regular Personal Loans with banks or with online lenders like Shubh Loans you are required to submit your KYC documents. KYC is Know your customer. These documents are required to establish your identity, age, address and income in the records. For any banking relationship these documents are mandatory.
You need to submit a copy of any of the legally accepted Identity proof documents, which includes:
- PAN Card
- Aadhar Card
- Voter ID
Documents for validating residential address are:
- Registered Rent Agreement
- Utility bills etc
Documents for proving Income:
- Salary slips
- Bank Statements
- ITR returns
- Form 16
Self-employed will require following documents:
- Proof of continuity of business
- Financial statements including P&L Statement & Balance Sheet
- ITR of last 2 years
- GST registration certificate
Step 3: Verification of Document
In this step, the lender will assess the authenticity of documents. They will verify if information on various platforms matches or not. They will verify identity & address, followed by employment & income details. The verification will also include background check with your employer and bank.
Successful verification of documents leads to approval of loan application.
In case of online loans like Cashe Personal Loan the process is even swifter. The Cashe doesn’t consider credit history of the applicant and the approval is based on AI-based credit scoring mechanism. Besides 100% online application process reduces the overall turnaround time.
Step 4: Loan Disbursal
This is the last and final stage. On successful completion of above steps, the lender will create the loan agreement and share loan details and terms & conditions. On your consent for the same, the final disbursement will follow. The loan agreement needs to be signed by the applicant to share the approval for T&Cs. It is always recommended to read the fine prints before signing the loan agreement.
Primarily all lenders follow these four steps to complete the loan processing. Even when you apply online for Personal Loans these steps are completed diligently. However due to digitization, all government issued documents like PAN Card, Aadhaar card and Passport can be verified instantly online and this has considerably reduced the processing time.
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