List Of Must Have Documents For Personal Loan

An amount of money that can be borrowed for personal reasons is a personal loan. This loan can be used for weddings, medical emergencies, vacations, home renovations, etc. This loan can be obtained from banks, online lenders, or credit unions. The borrowed money must be repaid on time with interest.

Let’s discuss in detail the benefits, rate of interest, and documents for personal loan.

Advantages of a Personal Loan

A personal loan comes with a variety of benefits. Below are a few of them:

• Multiple uses: There is no restriction on how a borrower uses the money from a personal loan. It can be used for emergencies, when you don’t have enough money, weddings, trips, or buying appliances for your home.
• High amount: One of the reasons why people prefer a personal loan is the availability of a high amount, up to Rs 50 lakh. However, the maximum amount a borrower can avail depends on their credit profile.
• Easy eligibility criteria: To avail of a personal loan, one must be a resident of India and 23–70 years old. The applicant must be earning a regular income as an employee or have a business of his or her own. That’s all, and the applicant is eligible to get a personal loan.
• Attractive rate of interest: Personal loans can be availed at attractive rates. These rates depend upon the lending partner from whom you borrow this loan and your credit profile.
• Flexible repayment tenure: Another major reason why people choose a personal loan is the option to choose their repayment tenure. They can choose to repay the personal loan for 12–60 months. The maximum tenure available to repay depends on the credit profile.
• Tax breaks: Depending on how the money from a personal loan is used, it may be possible to get a tax break. For instance, if the borrower uses the funds obtained from a personal loan to renovate a home, it can be claimed for tax deductions under Section 24(b) of the Income Tax Act, 1961. All of the benefits, including the amount, the interest rate, and the way they are paid back, depend a lot on the lending partner and the applicant’s credit history. 

Interest Rate on a Personal Loan

The interest rate on a personal loan starts at 8.90%. The rate at which an applicant can avail of a personal loan depends upon the bank or financial institution and the credit profile of a borrower.

Tips to Get Lower Interest Rates on Personal Loans

• Maintain a high credit score: Banks or financial lenders consider credit scores as proof of an applicant’s credit behaviour and creditworthiness. One must always ensure a high credit score by paying debts on time or maintaining a credit utilisation ratio. This helps in obtaining the desired amount of loan at attractive rates and the choice of tenure.
• Strong repayment track record: If an applicant’s track record is clean, as in all loan EMIs or credit card bills are paid on time, it shows impressive credit behaviour.
• Comparison of interest rates: An applicant should always compare the interest rates from various banks/financial institutions. This way, one can be assured of getting the best offer.
• Special Offers: During festive times, the bank offers special discounts on interest rates. An applicant must keep a check on such offers.
• Stable employment history: Banks prefer applicants with a strong and stable background working with reputed organisations. To avail of a loan at a favourable interest rate, one should maintain a strong employment record, as this assures the bank of fewer chances of payment defaults.

Checklist of Documents for Personal Loan:

Documents required for salaried individuals:

• Identity Proof

1. Passport
2. PAN Card
3. Voter’s ID
4. Aadhar Card
5. Driving Licence

• Residence Proof

1. Aadhar Card
2. Passport
3. Ration Card
4. Utility Bill
5. Driving Licence

• Residence Ownership Proof

1. Property Documents
2. Electricity Bill
3. Maintenance Bill

• Income Proof

1. Last three months’ salary slips and Form 16
2. Last six months’ bank statement where the salary has been credited

• Job Continuity Proof

1. Employment certificate from the current company
2. Experience certificate from the previous company
3. Appointment letter from the current company

• Investment Proof

1. Fixed Assets
2. Shares
3. Fixed Deposit

• Photograph

1. Passport-size coloured photograph

Documents required for self-employed individuals:

• Identity Proof

1. Passport
2. PAN Card
3. Voter’s ID
4. Driving Licence

• Residence Proof

1. Aadhar Card
2. Passport
3. Ration Card
4. Utility Bill

• Residence Ownership Proof

1. Property Documents
2. Electricity Bill
3. Maintenance Bill

• Office Address Proof

1. Maintenance Bill
2. Electricity Bill
3. Property Documents

• Business Existence Proof

1. Proof of shop establishment
2. Licence for company registration
3. Copy of tax registration

• Income Proof

1. Last two years’ income tax returns
2. Computation of income, balance sheet, audit report, profit and loss account, etc.

• Bank statement

1. Last year’s savings and current bank statement

• Investment Proof

1. Fixed Assets
2. Shares
3. Fixed Deposit 

• Photograph

1. Passport-size coloured photograph

Documents required for NRIs:

• Identity Proof

1. Passport copy
2. Visa copy

• Employment Proof

1. Letter of Employment
2. Job Contract
3. ID Card
4. Official company email ID or email ID of the HR

• Income Proof

1. Last six months’ bank statement
2. Salary slips or salary certificates 

• Photograph

1. Recent passport-size photograph

Documents required for Pensioners:

• Identity Proof (Anyone)

1. Ration Card
2. PAN Card
3. Voter’s ID
4. Passport
5. Driving Licence
6. Certificate of Birth
7. School leaving certificate

• Address Proof (Any One)

1. Aadhar Card
2. Passport
3. Ration Card
4. Utility Bills
5. Driving Licence

• Income Proof (Any One)

1. Last six months’ bank statement
2. Bank Pass Book
3. Form 16
4. Income tax return
5. Copies of Pension Payment Orders

• Photograph

1. Recent passport-size photograph 

Here is a compiled list of all the documents for personal loan.

An investor must access all the features and benefits compared to expectations to make a safe and informed decision. An applicant can take note of all the required documents for personal loan, as shared above, for a hassle-free application.

For more details on personal loans at attractive rates, visit: https://www.piramalfinance.com/personal-loan