Most of us plan our budgets carefully by keeping track of our income and expenses. But sometimes an unexpected expense might crop up and create chaos. Dealing with such a situation is difficult as you need to gather funds in a short time. Most people try to arrange funds by asking their family and friends. But there is no guarantee that you will be able to gather the required amount. Taking a personal loan is a better option in this situation.
There are many banks and private lenders who are now offering personal loans to their customers.
- The entire loan process gets completed within a couple of days.
- You do not need to show any collateral in the application process.
Most loan applicants use their loan amount immediately. People usually apply for a personal loan when they have certain expenses, like
- Paying educational fees for their children.
- To pay for wedding expenses.
- For religious activities.
- To cover the cost of medical bills.
- To buy high-value items and electronics.
Before you apply for personal loan, first check whether you are meeting the eligibility criteria or not. These criteria may slightly change from one bank to another. Some common eligibility criteria that you are expected to meet are
- Applicants must be Indian citizens over 21 years of age.
- They must have a steady source of individual income.
- They should be employed or self-employed.
- Should be able to provide proper income proof.
- Applicants must possess government-issued ID and address proofs.
Documents needed for submission
You need to submit a few documents with your loan application. The bank uses these documents for verification. Your income sources, spending habits, and debts are checked as part of the loan process. Some documents that you may need to submit to get a personal loan are listed below.
- Payslips or Income Tax Returns: A personal loan can only be taken by a person who has a steady source of income. Salaried employees need to submit their payslips for the past six months. Self-employed people can submit their income tax returns along with copies of their balance sheet and income statements. These copies need to be inspected by a chartered accountant before submission.
- Bank Statements: You may also need to submit your bank statements for the past 6 months. The bank will reimburse them for any undisclosed loans and EMIs.
- Address and ID Proof: You will need to submit documents as proof of your address and ID. Aadhar, passport, and voter ID are widely accepted by banks for address and ID proof.
How to get your personal loan approved fast
Most personal loans get processed within a day or two. But sometimes the process gets delayed. This happens when you do not follow the correct procedure while applying for a loan. Some common mistakes that people make when they apply for personal loan are
- submitting an incomplete loan application
- having unclear transactions
- submitting wrong documents
Banks will not process loan applications that have such issues. Check your loan application carefully to avoid delays. You can also follow these tips to get your loan approved faster.
- Submit the correct documents – Keep all your documents ready before you start your application process. Verify your information and ensure that the copies are clear.
- Check online – Most major banks are now offering loan services online. You can apply for a personal loan and get the amount credited to your account within a few hours.
- Check your credit score – If you have a good credit score, your loan will get approved faster. Check your credit score on CIBIL to understand how much you are eligible to get. You can also improve your credit score to get a higher loan amount. Regular payment of EMIs and credit card bills will help to improve your score.
- Maintain proper bank balance – You may be asked to submit your bank transactions for the past six months. These statements are checked for hidden loans, or EMIs. Large deposits or sudden withdrawals are also looked into as part of the loan process. If there is any suspicious activity, then the bank will reject your application. You should be mindful of your financial activities when you apply for a loan.
- Choose your bank – It is not advisable to apply for a personal loan from more than one bank. When you apply for a loan at different banks, your intentions become uncertain. As a result, your loan application may be rejected. Avoid this risk by choosing which bank you want to take your loan from. Compare the interest rate and EMI at different banks before selecting the best one for yourself.
- Multiple applications – Some people apply for loans at different banks within a short time. They think that they can increase their chance of approval. But, this has a negative effect on their application status. Banks now have the resources to check where else you have applied for a loan. Multiple loan applications are seen as a sign of deceit and are rejected.
- Show all income sources – You should show transparency while submitting your income documents. Do not hide any financial information from your bank, as this may delay your loan processing. Always give the correct documents that show all your income sources.
- Agreement signing – The last step is the signing of the agreement. Your loan agreement will contain loan details like interest rates and EMIs. You should sign your loan agreement as soon as it is ready. You will receive your loan amount after signing your agreement.Some people delay signing the loan agreement to check for better options. But this will result in a delay in getting your money.
Although you can take out a personal loan easily, there are a couple of things you need to consider. How much EMI can you afford, and what is the loan’s interest rate? It is a good idea to compare personal loan offers from various banks before you begin applying.
To get expert advice, visit Piramal Finances at https://www.piramalfinance.com/personal-loan