Document Required for Personal Loan

To meet the eligibility criteria of the Personal Loan provider, you need to submit the required set of documents. The documents are used to assess your financial stability and repayment capacity. 

Personal Loan Documents

Following are some common documents that are required to be submitted along with the Personal Loan application:

  • Recent coloured passport size photograph
  • Identity proof (any one): Passport/ Voter ID Card/ Driving License/ PAN Card/ Aadhar Card
  • Residence proof (any one): Utility Bill/ Ration Card/ Aadhaar Card/ Passport/ Rent Agreement
  • Investment proof (any one): Passport/ Voter ID Card/ Driving License/ PAN Card
  • Payment Track Record for existing loans if any and the sanction letter for the same
  • Processing fee cheque

Documents Required for Salaried Employees

  • Employee ID Card
  • Last 6 months’ statement of the bank account where salary is credited
  • Last 3 months salary slips
  • Present Employment Certificate/ Appointment Letter and Experience Certificate as Job Continuity Proof.
  • Form 16

Documents Required for Self-employed /individuals/professionals/businessmen:

  • Last 1 year’s bank statement of the savings bank account as well as current bank account
  • Last 2 years’ Income Tax Returns along with the Computation of Income, Balance Sheet, Profit & Loss Account.
  • Proof of office address and ownership: Property documents/ maintenance bills/ utility bills

Senior citizens must provide the following additional documents:

  • Their pension document or bank statement as income proof

Apply Online for Personal Loan

Apply for a personal loan online and get funds up to Rs. 50 lakhs instantly disbursed to your bank account on approval. Repay the borrowed amount in tenure of 12 to 60 months.

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Personal Loan Documents FAQs

Are Personal Loans given for only a few purposes?

Personal Loan can be taken to meet any kind of expense. It could be a large expenditure, a family vacation, home renovation, medical expenses, business investment, and so on. There are no specific reasons defined for which Personal Loans are given.

Who is eligible for a Personal Loan?

Anyone who is either self employed or a salaried individual is eligible for a Personal Loan. However, factors such as the person's salary, credit history, residential location, age, and so on, do tend to govern the criteria to judge the borrower and the amount of loan a person will get thereafter.

What is Personal Loan tenure?

Personal Loan tenure refers to the time period under which the borrower has to repay the obtained loan amount. Commonly Personal Loan tenures are from 1 - 5 years. It is very rare to find shorter or longer tenures for Personal Loans. The duration varies from amount to amount and case to case.

Do different lenders have different Personal Loan amounts that one can borrow?

Yes, different lenders have different specifications as to how much minimum amount a borrower can borrow under a Personal Loan.

What is the criterion to decide the maximum loan amount a borrower can borrow?

The maximum Personal Loan amount differs for salaried and self-employed individuals.

For the salaried, the maximum Personal Loan amount must be fixed in a way that their EMI never exceeds 30%-40% of their take home salary. In this calculation, existing loans taken by the borrower are also considered before the Personal Loan amount is calculated.

In case of self-employed individuals, profit earned by them helps determine the loan value. For this their recent Profit/Loss statement is considered. Also, their existing liabilities such as current business loans too are considered.

Can Personal Loan be taken jointly?

Yes, you may apply for a Personal Loan jointly, with a co-applicant. However, it is necessary that your co-applicant is your family member - parents, siblings, or spouse. Jointly applied Personal Loans are processed in an income bracket higher than single applicant loans; thus, allowing you to secure a bigger loan as the risk is divided. However, a poor credit score of your co-applicant can possibly reduce your chances of getting the loan as well.

Is lowest possible EMI the only criteria to select a loan provider?

Any lender offering a lower EMI is obviously either charging a low interest rate or has offered a long repayment term. It can also be a combination of both these factors. Therefore, it is important to consider the loan period as well as the rate of interest before deciding which lender to go with. Longer loan periods would also mean an expensive loan where you end up paying a lot of interest to the lender in the long run.

Do lenders offer a relationship discount? What is it?

Yes, some lenders do offer a relationship discount. It is an extra benefit offered by some banks to prospective borrowers with whom they have shared a good, pre-existing, relationship. This means that the borrower might be having a savings account, fixed deposits, or Credit Cards with the bank. Based on this relationship the bank may offer some discounts to the client such as waiving off the processing fees or offering a lower interest rate or floating any other investment scheme in offer.

What happens when someone defaults on scheduled Personal Loan EMIs?

There are settlement and recovery agents who are employed by lenders to help recover their loan amount. However, failing to repay the loan account gets marked as defaulter and the same is reflected in the individual's credit report as a default. Such an indication adversely affects one's credit score and makes it extremely difficult to get loans or credit cards in future.

Will I get any tax benefit on my Personal Loan?

There are no tax benefits associated with Personal Loans. However, when a Personal Loan is taken for home renovation or a down payment of a house/flat, or for business expenses, one gets income tax deduction on the loan. You must furnish relevant receipts confirming the usage of the loan to claim the tax deduction

Do I have to pay any pre-payment charges on my Personal Loan and how much?

If you want to make a pre-payment to your Personal Loan and clear it off before the tenure ends you are charged a nominal fee, known as the pre-payment/foreclosure charge/penalty. It ranges from 1-2% of the outstanding principal.

How does a high credit score benefit me?

When you have a higher credit score, it vouches for your good track record in paying off loans. For instance, if your CIBIL score is higher than 700 you have a better chance of getting a bigger loan as compared to when you have a lower score. A higher credit score also helps you to leverage a better deal in terms of getting the processing charges waived off or getting a lower interest rate.

What is the difference between Personal Loan and Loan Against Credit Card?

Many Credit Cards offer loan on the card. They are similar to Personal Loans with respect to loan terms and interest rates. However, you can take loan on Credit Card only from your card issuer and not others. In case of Personal Loans you may take loan from any lender whether or not you have an account with the institution or not. Credit Card loans are simpler to take as no additional documentation is required as is the case in Personal Loan applications