According to data released by RBI, personal loans recorded the highest disbursals in July since February for the year 2020. There was an increase of 11.2% year-on-year (y-o-y) for personal loans on an overall basis, thereby ending the month at Rs.25.31 trillion. These figures make it quite clear that many Indians resorted to personal loans as a viable financing solution in that period.
Given the various utilities of a personal loan, such figures are not surprising. While a personal loan can help an individual meet diverse needs, there are several steps involved in a personal loan application.
Going through the below-mentioned steps would let an individual know how to apply for personal loan easily.
How to apply?
Individuals who have planned to avail a personal loan must first fill up an application form with their personal and professional details. While an application form can be filled up both online and offline process, the online route is the simplest one.
One can fill up an online form through the financial institution’s website from whom one is looking to acquire an online personal loan. The offline form can be accessed by visiting the nearest branch of the financial institution.
Following is a step-by-step guide to complete the online application process –
Step 1: Enter personal, employment and financial details.
Step 2: Choose the required loan amount and tenor.
Step 3: Submit all required documents to the financial institution.
Step 4: Borrower receives loan amount within 24 hours after approval.
Document verification
When financial institutions receive the borrower’s loan application, the verification process is initiated. The eligibility criteria, which includes the individual’s age, profession, minimum monthly salary, etc., is also checked to determine whether he/she meets the requirements or not.
Executives from concerned financial institutions might visit the borrower’s address for document collection.
After basic details, financial institutions initiate verifying the KYC documents, which are either uploaded along with the application form or submitted in person. Following are a list of KYC documents that customers must submit during personal loan application to their respective financial institutions:
- Voter ID card
- Aadhar Card
- Driving License
- Passport
- A letter with the name and address issued by National Population Register
- Permanent Account Number or Form 60, whichever is applicable
- Job card issued by NREGA with the sign of an officer of State government
CIBIL score check
CIBIL score plays a vital role in the loan approval process. Therefore, financial institutions look into a borrower’s credit score, previous repayment records, IT returns, or salary slips after completing the verification process. A high credit score would boost the chances of getting your loan approved. However, you can also get a personal loan when you have a poor credit score.
To maintain a favourable credit score, a borrower must be responsible for timely loan repayments. This would also open doors to various offers from financial institutions.
For instance, financial institutions extend pre-approved offers to speed up the loan application process. Such offers also apply to various products like personal loans, business loans, credit cards and many more. Individuals can check their pre-approved offer simply by entering their name and contact number online.
Tax benefits
While a personal loan proves to be a really handy option when it comes to financing one’s professional and personal needs, personal loan tax benefits are possible but conditional. If you seek a personal loan, you must be aware of how a personal loan can provide you tax benefits.
The above-mentioned information can be a handy guide for borrowers looking to initiate a personal loan application.