Personal Loan

Most important qualities to have while applying for a personal loan?


A personal loan is excellent when you need money to pay sudden costs. These may include your children’s education, renovating homes, expensive medical care, etc.

Personal loans are popular because they have precise repayment terms. Plus, they do not demand any security. Despite this, your eligibility for a personal loan depends on different parameters.

Since personal loan requirements vary, you should familiarize yourself with the bank’s conditions before you apply for a personal loan. You need to make sure to meet all the documentation needs from the banks.

Suppose you know this before meeting the bank official. In that case, your application process can be simplified, improving your chances of getting that loan.

Requirements for a Personal Loan in India

Generally, banks ask for the following requirements when you apply for a personal loan:

1. Applicant’s Credit Score and History

This is by far the most vital eligibility factor when you apply for a personal loan. Credit scores are based on one’s payment history, any outstanding debt, and the total duration of credit history.

A good credit score ranges between 300 and 850, so a borrower’s credit score should range between 670 and 720. However, some lenders give out loans without checking out the credit histories.

2. Regular Monthly Income

You must show your income statement to your banker if you have a steady income. This will give you a better chance of getting the loan as the banker will believe you can repay the monthly instalment.

Other important documents might include rent tax receipts, bank statements, and pay slips. You could provide tax returns or your fixed deposits if you are self-employed.

3. Security

Do you have any valuables you can pledge to the bank instead of a personal loan? What you promise to the bank is security or collateral, which you offer the bank in exchange for a loan.

Perhaps, you have investments, coins, collectables, precious metals, or real estate. Offer this to the bank in exchange for your loan. After you pay up the entire amount, the bank official will return your security.

However, this is considered risky because, if you do not pay on time or in full, the lender may repossess the security in exchange for the money owed to the bank.


4. Debt-To-Income Ratio

Debt-to-income ratio (DTI) is that part of an applicant’s gross monthly income that will go towards paying his monthly instalment. This figure indicates a borrower’s debt repayment ability.

Bankers find that a DTI below 36% works best, though others may seek a DTI of about 50%.

You can also ask your banker for the eligibility requirements before meeting him. Once you know this, you can be better prepared for your meeting.

5. Origination Fee

This isn’t mandatory, though some bankers ask you to pay this fee. It pays for processing your application, carrying out credit checks, etc.

Generally, this fee ranges between one per cent and eight per cent of the total loan amount. It depends on several factors, such as:

  • The applicant’s credit score
  • The loan amount

Personal Loan Documents Required for the Application Process

Fulfilling the eligibility criteria for a loan means submitting certain documents. These prove your identity, your address, and your place of work.

Here are the documents you will be required to submit for your loan to be processed:

For Salaried Individuals

  • Proof of Identity: Voter ID card/Aadhar Card/Driver’s License / Employer’s Card
  • Proof of Residence: Ration Card/Telephone Bill /Electricity Bill /Voter ID card
  • Income Proof: Latest Bank Statement/Passbook to show salary credited for the past six months, latest six months’ salary slip with all deductions
  • Form 16 of the past two years
  • Copies of property documents

For Self-Employed Individuals

  • Proof of Identity: Voter ID card/Aadhar Card/Driver’s License/Employer’s Card
  • Proof of Residence: Ration Card/Telephone Bill/Electricity Bill/Voter ID card
  • Income Proof: Certified Financial Statement for the last two years, latest bank statement/Passbook in which your salary is credited for the past six months
  • Copies of all Property Documents

Documents Required for a Personal Loan

Along with your loan application, be sure to add the following documents as well:

  • Proof of Identity: Passport copy/Voter ID card/Driver’s License/Aadhar card
  • Proof of Residence: Passport copy/Voter ID card/Driver’s License/Aadhar card
  • Bank statement of the previous three months or passbook of the last six months

How to Qualify for a Personal Loan

Knowing a few things about the application process is good before you fill out the form. They include:

  • Checking your credit score
  • Improving your score by paying off any debt
  • Think of a realistic figure that you would like to borrow
  • Shop around for the best rates using lender prequalification
  • Ensure you submit only a formal loan application
  • Once you complete applying for a personal loan online, you will need to wait for a few hours until the banker decides. Usually, you will know the outcome that very day.


Now that you know what to do to qualify while applying for a personal loan, you can prepare for it so that your application is accepted. One way of doing this is to access the Piramal Finance website and read all the articles on personal loans and other related topics.

This company is one of India’s leading financial services companies. So, go ahead and explore its products and services.