A personal loan is a type of unsecured loan that is often borrowed to meet any type of monetary requirement of individuals. As this loan comes with no usage restriction, borrowers can use this borrowed amount for different purposes. Moreover, the simplified way of personal loan application process offered by lending institutions help borrowers meet their financial urgencies in a hassle manner.
What is the Application Procedure for a Personal Loan
Generally, various financial institutions have their own website where the online application for a personal loan can be submitted within a few clicks. However, some of the basic steps that are involved in the application procedure for a personal loan are as follows:
Step 1: Log on to the portal and click on the “Apply” option on the online application form.
Step 2: Provide the contact number and continue with the verification process through the OTP sent to your phone.
Step 3: In this step, fill in the application form by entering all the essential information like full name, PAN, date of birth, address and PIN code.
Step 4: Upon completing the above mentioned step, visit the loan amount selection page, where a borrower can apply for the actual loan requirement. Depending on the website layout, individuals can also choose the repayment tenure.
Step 5: In this final step, individuals must complete their KYC and complete the application procedure.
It is advisable to check the status by using a personal loan eligibility calculator to accelerate the loan approval process and ensure that applications do not face rejection. With help of this digital tool, one can access the amount of loan he/she is eligible for and choose the preferred repayment tenure.
However, this greatly depends on an individual’s monthly income and credit history.
Benefits of a Personal Loan
Personal loan offers great assistance in times of monetary need and eliminates the obligation of borrowing from friends or relatives. Moreover, as a personal loan is unsecured, a borrower need not bear the risk of keeping any valuable assets as a mortgage. Apart from this, there are several advantages that an individual can unlock upon applying for a personal loan.
- Hassle-free documentation and loan application
In today’s time, many reputed financial institutions are offering digital documentation and application for a personal loan. Moreover, the requirements of documents for application have become simple to a great extent, which enhances this stress-free process. On top of this, the executives offer a doorstep collection of documents that not only saves the time of the applicant but also makes the entire process seamless.
The inception of an online loan application, as a revolutionary initiation by renowned lending institutions, has made the process quick and simple. Borrowers need to make the application online through the authorised website of the concerned lenders.
- Minimal eligibility criteria
Various financial companies have introduced minimal eligibility criteria for a personal loan to help customers in times of emergency. Some generic eligibility criteria involve borrowers holding residential status in India, falling in the age bracket of 23-70 years old.
Moreover, the applicant must have a regular income from a reputed company and a healthy credit history. Mostly, the desirable CIBIL score that lending institutions provide emphasis on is 750 and above.
- Zero end-use restriction
A personal loan is extremely versatile in nature as there is no end-use restriction. Therefore, borrowers can use the loan amount towards fulfilling any expenses like education, wedding, travelling, home renovation, medical, etc.
This serves as the biggest advantage as individuals can use the loan amount towards any objective without any limitations.
- Competitive interest rates and flexible loan repayment tenure
A personal loan is available at competitive interest rates from different credible lending partners. Moreover, flexibility in the loan repayment tenure is offered with the idea of eliminating excessive burden of paying EMIs. However, it is pivotal to note that these opportunities depend on an applicant’s credit history and eligibility in both cases.
- Disbursal of loan amount in no time
Most financial lenders value time and monetary needs of borrowers; hence, the disbursal process of loan amount happens in no time. Keeping the monetary urgency in mind, these lenders ensure that monetary obligations are being met at the time of need. Moreover, hassle-free application and paperless documentation of personal loans accelerate the disbursal process to a great extent.
- Availability of tax benefits
As per Section 24(b) of the Income Tax Act, 1961, borrowers using loan money for the home renovation can claim tax deductions. In addition to this, if a borrower obtains a personal loan for purchase of gold or for business expansion, they will receive subsequent tax benefits, as per the Act.
What are the Documents Required for Application of a Personal Loan
To apply for a personal loan, an individual needs to submit a few documents as requested by the specific lending institution. Though documentation procedure will differ across these institutions, here are a few significant documents that are required while applying for a personal loan:
- Valid identity proof – Voter ID Card, driving license, PAN or Aadhaar number
- Complete loan application form duly filled and signed
- Residential proof- Ration card, electricity or telephone bill, bank passbook or statement, driving license, etc.
- Supporting documents for age proof
- Income tax return
- Form 16
- Salary slips and bank statements of the last few months, in case the applicant is a salaried individual.
With easy availability of personal loans due to streamlined application process, quick disbursal and flexible repayment tenure, personal loans help individuals satisfy their monetary needs at the right time.
Also Read: How Personal Loans are Good for the Indian Economy