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A personal loan is provided by either a bank or an NBFC. Both of these financial institutions have lending capabilities. The steps involved in approaching them for a personal loan, getting it approved and their disbursal methods are similar. Choosing a good lender is essential for a smooth experience. Let us look at how to identify such a lender in 3 easy steps.
3. The Application Process
- 3+ months of bank statement
- Meeting the income requirements set by the financial institutions
- A good credit score of 700+
- Using 30% or lower proportion of total credit card limit
- Not taking multiple loans
- Being within the age limit set by the preferred lender
- The credibility of the lender
- The rate of interest and whether it is fixed or variable
- The loan amount available
- The loan terms
- Charges and fees included in the loan
- The repayment amount
- The repayment terms
When comparing lenders, don't just look at the rate of interest charged. Although an important consideration, it is essential to examine other factors as well as mentioned above.
- Documentation Requirement: Do check the documentation requirement of the lender. These would usually include, proof of your identity, proof of residence, proof of nationality and proof of income.
- Ease of Application : Most good lenders have websites and mobile apps through which you can upload all the required documents and get your application approved. Choosing a lender that lets you apply online will make it easier and more convenient for you.
- It is important to check your loan eligibility among the shortlisted financial institutions. Banks and NBFCs set their own criteria to reject or approve a loan. Some factors that favour your eligibility for personal loans are:
- A lender needs to have access to your credit data for considering your application. Make sure you choose a lender that meets the eligibility criteria.Going through the conditions of eligibility will tell you which lender is likely to approve your loan. An important thing to remember about comparing personal loan providers is to visit online financial marketplaces for this purpose. Making direct loan inquiries from financial institutions affect your credit score negatively. This, in turn, hurts your loan application. While comparing the offers from different lenders, you should examine –
- It is important that the lender offers you a simple and friendly application process. Moreover, approval and disbursal should be quick. To choose the best lender, take a look at the following two things:
Personal loan disbursements have seen unprecedented growth in the last few years. Banks and NBFCs have relaxed lending terms and made the process faster and easier with the help of technology. However, it is essential to be financially responsible when taking such loans to ensure you don’t land yourself in a debt-trap.
DISCLAIMER
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.
FAQS - FREQUENTLY ASKED QUESTIONS
How to get a Personal Loan ?
Obtain a Personal Loan smartly.
Research lenders for rates and terms.
Gather the required documents: ID, income proof and credit history.
Complete the accurate application with all the information.
Submit your application online or in person.
Review the terms and sign the agreement carefully.
Manage loans responsibly and make timely payments. Prepare, consider, and secure.
How do I find the best loan provider ?
Research, evaluate and check the credibility of different lenders. It will help you find the best loan provider with favourable terms and competitive rates.
What are the three documents needed for a Personal Loan ?
To apply for a Personal Loan, you'll need the following documents:
Identity proof: Copy of your passport, voter ID card, driving licence, or Aadhaar Card.
Bank statement: Provide your bank statement for the past three months or passbook for the previous six months, showing your financial transactions and stability.
Salary proof: Submit two recent salary slips, a current-dated salary certificate, and the latest Form 16 confirming your income and employment details.
What are the steps of a Personal Loan ?
The Steps for a Personal Loan include:
Research: Look for lenders and loan options, considering interest rates and requirements.
Apply: Fill out your loan application with accurate personal and financial information.
Verify: The lender checks your creditworthiness and confirms the details you provided.
Agreement: Review and sign the loan agreement, understanding the terms, rates and fees.
Disbursal: Once approved, the lender transfers the loan amount to your bank account.
Repay: Make timely payments according to the agreed schedule to fulfil your loan obligations.
Can I get a Personal Loan without a salary ?
Yes, it's possible, especially for self-employed individuals. Alternate income sources or a good credit score can be considered instead of a salary slip. Building a good relationship with the lender is crucial.
Who is eligible for a Personal Loan ?
Individuals aged 21 to 60, including self-employed, entrepreneurs, and salaried individuals, are eligible for a Personal Loan. Usually, you need a minimum credit score of 750.
Do Personal Loans affect credit scores ?
Personal Loans impact credit scores. Applying for one can cause a slight dip due to hard inquiries. Lenders run these inquiries, which appear on credit reports and temporarily lower scores.