Personal Loan

Importance of a Salary Slip to Avail a Personal Loan


Personal loans are loans issued by banks and other financial institutions that are not backed by collateral. They can be used to cover unexpected expenses or costs. A personal loan is a typical way to pay for things like higher education, weddings, medical bills, etc.

Here you will understand the importance of having a personal loan on a salary slip.

What is a salary slip?

If you work for a company every month, you should get a “salary slip” from your employer outlining the specifics of your income. The salary slip will include any deductions and net pay for the month.

The various components, such as base income, housing allowance, dearness allowance, and performance bonuses, are detailed on a pay slip. The play slip will include provident fund, professional tax, and tax withheld at source (TDS).

The pay slips serve as evidence of earnings. New employers, financial institutions, credit card providers, and tax authorities frequently require salary documentation. A credit report is a must if someone wants to apply for a loan. You can use the salary slip and proof of income.

What is the minimum salary for personal loans?

When it comes to personal loans, there is no set minimum income requirement. The loan officer will look at numerous aspects to determine if your salary is sufficient to qualify for a personal loan. The personal loan on a salary slip will be decided based on the following criteria.

1. Where do you live?

Your location influences the minimum salary required for a personal loan. The minimum wages in Tier-II cities and towns are often lower than in Tier-I cities and towns, including major metropolitan areas. Therefore, where you stay affects your repayment ability.

2. Do you own a home?

The minimum wage requirement also depends significantly on whether you own a home or rent a property. This is because if you have to pay rent, you will have less money to put toward your loans. Therefore, you can qualify for lower amounts.

3. Do you have other debts?

The minimum income requirement will increase if you have other loans. It will also increase if you are paying off credit card bills. Therefore, check your liabilities before applying for a loan.

4. How is your credit history?

Credit history plays a significant part in evaluating loan eligibility. A strong credit history indicates that you make payments on time. You are more trustworthy, and this will result in looser qualifying standards. However, loan applications might be denied if your credit history is poor. If you have missed several payments, it will affect the personal loan application.

Why is a personal loan on a salary slip important?

A personal loan on a salary slip is necessary for several reasons. Here are some reasons why you should submit your salary slip when applying for a personal loan.

1. Income tax planning

Different portions of your income, such as the basic pay, HRA, leave travel allowance, etc., may be subject to different tax rates. To minimize your taxable income for the given fiscal year, it is helpful to grasp the worth of the many parts that make up your income.

2. Employment verification

In legal terms, a salary slip establishes employment. You may be required to provide copies of your most recent pay stub while applying for a personal loan. It is proof that you are earning as much money as you claim. It also helps the lender determine how much money you are paying in taxes and whether you can afford the EMI.

How can self-employed people show salary slips?

You have put in many long hours, followed your heart, and have a successful freelancing job. Congratulations! Being your boss has several benefits, including allowing you to craft a schedule that works for you and your family. However, there are also downsides, such as having to deal with circumstances where you need to provide evidence of income to get a loan.

In general, financial institutions feel more secure with the steady income of those who work for a single company and receive a set wage. They are cautious of the finance of self-employed individuals because self-employed income is regarded to be less dependable.

If you are a freelancer or a business owner, you will probably not give yourself pay slips. Instead, you can provide other documents, such as your income tax returns. These can serve as alternative documents when applying for a personal loan on a salary slip.

What alternative documents can you provide for a personal loan on a salary slip?

You might lose one or two salary slips here and there. While banks ask for income proof when providing a personal loan on a salary slip, not everyone can give it. Here are some alternative documents you can provide:

1. Bank account statements

You can use your bank account statements to show how much money you earn. It is a great idea if you earn money from several sources. If you are a freelancer or business owner, you can open an account specifically for your business income. Statements of these accounts can be used as income proof.

2. Income tax returns or Form 16

You can also submit a copy of your income tax returns or Form 16 from the latest financial year. However, this might not help you much if your salary has increased recently and you are depending on this salary.

3. Income certificate

Some employers may provide you with an income certificate or an offer letter which includes your salary. You can also submit this as proof of income when applying for a personal loan on a salary slip.

A key point to remember is that the lender wants to confirm your income. Therefore, any legal bank-issued or employer-issued document may be accepted. You can also ask how you can provide income proof if you cannot provide these documents.


Salaried employees receive pay from their company and typically on a specified day. A salary slip is one of the most crucial papers for an employed professional, despite its seemingly small size.

When applying for a personal loan on a salary slip, you must submit salary slips for the latest 2-3 months. Therefore, keep these documents safe. If you are facing any issues getting a personal loan, you can contact Piramal Finance for the same!