Checklist of Required Documents for a Personal Loan

Down payments on homes, an unexpected expense, a vacation, these are just a few examples of moments in our lives that require substantial amounts of cash.Even though it’s good to use the cash you have, sometimes it’s just smarter to opt for an option that helps you build your credit score as well because in the long run, it’s always good to have a strong credit rating.And that’s where Personal Loans come in.In this article we will guide you through everything you need to know about Personal Loans.

The business dictionary defines a personal loan as -Consumer loan granted for personal (medical), family (education, vacation), or household (extension, repairs, purchase of air conditioner, computer, refrigerator, etc.) use, as opposed to business or commercial use. To put it in simpler terms - A personal loan is an unspecified amount a person borrows from a bank, or any other financial institution, in order to meet a personal need/requirement.

Like the name suggests- a personal loan can be used to fulfil any personal requirement.From home renovations and European vacations to your child’s education and, even unexpected medical expenses- a personal loan can be used to finance anything and everything under the sun.
Personal loans are also quite useful when it comes to investing in businesses, purchasing big-ticket items, fixing your car, making a down payment for a new home, etc.

Anyone with a regular source of income is eligible to apply for a personal loan.

The thing that makes personal loans the most desirable commodity for you is thatunlike a home loan or a car loan, a personal loan does not require any collateral.Meaning- when taking a personal loan you are not required to secure it against an asset of yours.

Yes, though the exact amount varies from one institution to another. Most lenders have set their minimum personal loan principal amount at Rs 30,000.

Personal Loans can be repaid in the form of EMIs (Easy Monthly Installments) via post-dated cheques (PDC) drawn in favour of the bank or by releasing a mandate allowing payment through the Electronic Clearing Services (ECS) system.

Though the documentation requirements vary from one financial institution to another, some key documents you will have to provide with your personal loan application include: - Income proof

• In case you’re employed, your monthly salary slip.
• In case you’re self-employed, a recent acknowledged ITR.

- Address proof documents

• Ration card
• Passport
• Telephone or Electricity Bill
• Rental agreement

- Identity proof documents

• Aadhar Card
• Valid Passport
• Valid Voter ID Card
• Valid Drivers’ License

- Certified copies of degree/licence (in case of self-employed individuals)

• Sole Proprietorship Declaration Or Certified Copy of Partnership Deed,
• Certified original copy of Memorandum and Articles of Association (certified by Director)
• Board resolution (Original)

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.