Documents Required for Personal Loan – Salaried / Self Employed
It is common for people to be in urgent need of cash for various reasons. The most common ones include the following:
a) Clearing the existing debts.
b) Renovating the house.
c) Purchasing an automobile.
d) Medical requirements.
The best solution to meet unexpected financial needs is to apply for a personal loan. Before we get into the required documents, let’s briefly know about personal loans.
A personal loan is an unsecured loan offered to people to fulfill their financial needs. You can use a personal loan to take care of your immediate demands. The lenders consider different criteria before granting the loans, including the following:
a) Employment history
b) Credit score
c) Income level
d) Repayment history.
Personal loans for salaried and self-employed individuals can be usually paid back in monthly installments. Sometimes, personal loans are called “consumer loans”. The period is usually a few months or years depending on the purpose and how punctual your repayments are.
Steps to get a personal loan
It is advisable to compare all loan choices before making a decision. Most lenders would want a credit report, and along with the factor-interest rates, loan term and fees should be mentioned.
Once a suitable lender has been chosen, the following documents have to be submitted:
- Loan details
- Income verification
- Personal information documents.
For a hassle-free process, all the relevant and supporting documents should be submitted which might vary based on the income source. Different documents are needed for salaried and self-employed people.
Documents required for a salaried individual
If you are a salaried individual, you have to submit the following documents:
Identity Proof
- Passport
- Aadhar Card
- Driving License
- PAN Card
- Voter’s ID
Proof of Residence
- Ration Card
- Aadhar Card
- Driving License
- Passport
- Utility Bill
Proof of Ownership of the Residence
- Electricity Bill
- Property Documents
- Maintenance Bill
Proof of Income
- Salary slips for the past three months
- Bank statements for the previous six months
Proof of Job Continuity
- Employment certificate issued by the current employer.
- Appointment letter from the current employer (if the employment period is more than two years).
- Experience certificate (job or appointment letter from the previous employer).
Proof of Investment
- Fixed Assets
- Shares
- Fixed Deposits
Photograph
- One passport-size color photograph.
Documents required for self-employed individuals
The following documents are needed for a personal loan from self-employed individuals.
Proof of Photo Identity
- PAN Card
- Voter ID
- Passport
- Driving License
Proof of Residence
- Passport
- Utility Bill
- Aadhar Card
Proof of Residence Ownership
- Property documents
- Electricity Bill
- Maintenance Bill
- Proof of office address
- Property documents
- Electricity Bill
- Proof of Business Existence
- Company Registration License
- Tax Registration copy
- Shop Establishment proof
Proof of Income
- Income tax returns for the previous two years. They should be inclusive of the computation of Income, audit reports, etc.
Bank Statement
- Current bank statements and savings for the past year
Proof of Investment ( If any)
- Investments that include fixed assets, fixed deposits, and shares
Photograph
- One passport-size color photograph
Things to keep in mind before taking personal loans for salaried individuals
- Maintaining a good credit score:
This is a key factor that aids in the approval of a personal loan for a salaried individual. It should be maintained for ease of support on your later loan request.
- Employer reputation and stability:
This is important when it comes to collateral-free loans. The lenders will be inclined to grant loans to employees of a reputed entrepreneur. However, individuals who work with reputed employers prefer low-interest rates. Thus, they are given many options to choose from. You should make sure that you work for a reliable employer before applying for a loan.
- Avoid multiple loan applications at the same time:
It is important to avoid damaging your financial profile in hard inquiries. A hard inquiry takes place when the lender approaches the credit bureau for an official inquiry about your request. If you have taken too many loans, your credibility will be affected. It’ll make the lender hesitant to grant the loan.
Things to keep in mind before taking personal loans for self-employed individuals
- Ensure your finances are doing well:
Be diligent with your finances. It is important to put out a good portfolio for yourself since it is given that self-employment comes with fluctuating income.
- Have all the necessary documents to prove your income:
The flow of income is the key difference between a self-employed individual and a salaried individual. Hence, proving your stability is important. It’ll be beneficial for your personal finance goals. This will ensure an efficient personal loan for self-employed individuals.
- Ensure security for the future:
Uncertainty is a major factor in cases of personal loans for self-employed individuals. Businesses experience many changes with time. Sometimes, the profits may not be enough. It is important to show lenders proof of your savings. This assures them that you can get yourself covered in unexpected situations.
Conclusion
You should assess all the requirements before deciding on a personal loan. It is important to apply for a loan that suits your financial aspirations and fits your current cash flow. The requirements for personal loans vary for salaried and self-employed individuals. Repay your loans on time to improve prospects for personal loans. Do not try to take too many loans. It will prove to be an obstacle in the future. Be sure to research all the different options and the potential risks of a personal loan. For further details, you can visit our website Piramal Finance. It’ll be our sincere pleasure to answer all your queries.