A personal loan is by nature an unsecured credit that is provided to an individual based on his personal capability of repayment. The process is extremely simple and fast provided that the requisite documents are in order when applying for the loan. These documents pertain to the repayment capacity as indicated through the income proof and other personal details such as identity, age and residence proof. Most of the financing institutions in India have a similar set of document requirements for approving personal loans which seek to establish the above listed credentials of the applicant.
Proof of Identity: The customer who applies for a personal loan has to establish his identity by providing any one of the following documents to the bank or any other financing body.
- Driver’s license
- Ration card
- Telephone (land/mobile) bill
- Voter’s ID card
- Electricity bill
- Employer (preferably government issued) ID card.
- Life Insurance premium receipt
- Lease deed/Utility bill/Municipal tax receipt/Title deed
- PAN Card.
Proof of Age: In order to establish the age of the applicant any one of the following documents must be submitted along with the application for a personal loan:
- PAN Card
- Voter’s ID Card.
- Secondary school leaving certificate (Class 10)
- LIC policy or premium receipt that clearly indicates the applicant’s age
- Order of Pension payment.
- Birth Certificate Issued by Civic Authority.
- Government Employee ID Card
- Defence ID Card
Proof of Residence: the commonly accepted proof of residence for the purpose of personal loans includes:
- Government issued employee residence proof.
- Ration Card.
- Bills of electricity or water connection
- Ownership and title deeds of property where residing
- Telephone bills (Land Line only)
Proof of Income: This is the most important factor determining the eligibility for personal loan. The proof of income required by the finances varies with the applicant’s source of income.
For salaried individuals: The requirements are comparatively simpler for salaried individuals applying for a personal loan.
- Latest salary slips from employer that has details of all standard and continuing deductions.
- Last 3 months statement of bank for salary account.
- Appointment letter or proof of continuity of employment.
- Form – 16 for last 2 years which indicates details of income and deductions
- Acknowledged receipts of income tax returns of last 2 years.
For self-employed persons: For persons who are self employed a few additional documents are required while applying for a personal loans in India.
- Proof of employment such as Trade license/Establishment/Sales Tax certificate
- Acknowledged receipts of income tax returns for the last 2 years.
- Detailed financial audit of the self run enterprise for the last 2 years reflecting annual profits and losses
- Statement of bank account reflecting transactions of last 6 months.
While the approval process of a personal loan is quite simple and fast the documentation is stringent since the credit is primarily unsecured and the lender would like to make sure that all aspects are thoroughly verified before disbursing the money.