Securing a personal loan can be a quick and smooth process if all the eligibility criteria and documentation needs of the borrower are met. Swift approval of personal loans is assured by banks and other financial institutions once the borrower’s credit history, financial discipline, employment status and other basic eligibility parameters are met. Before we explain the steps to be followed in getting a personal loan swiftly, let us understand what a personal loan is.
What is a personal loan?
A personal loan is a financial instrument that helps individual borrow funds to meet his/her immediate financial needs that are personal in nature. People usually opt for personal loans when they want to finance their short-term needs such as marriage costs, home renovations, a foreign holiday or even to fulfil an urgent medical expense. There could be a multitude of such reasons for people to go for personal loans which promise to fund immediate financial contingencies. The most important aspect of a personal loan is that it does not require the borrower to provide any collateral or security.
The good news is personal loans require a minimum amount of documentation and the approval process is quick, unlike other types of loans like home loans or car loans. If the lender is convinced of the borrower’s repayment capacity, personal loans could be disbursed within a few hours.
What are the Steps to Follow to Get a Personal Loan?
Understand Your Requirement
It is important to determine the purpose of your loan requirement and the exact amount required to fulfil that purpose. If it’s a wedding, it may cost you Rs 15 lakh and if it’s a foreign trip, you may require Rs 3 lakh. So, the first step is to understand your needs, before applying for the amount.
Check Loan Eligibility
Once the loan amount is determined, you have to check eligibility. Some of the criteria differ between banks. You can check the eligibility of each financial institution based on your needs. Some basic requirements like age, employment status are standard for every lender. The next section gives a wider understanding of eligibility parameters.
Calculate Monthly Instalments
Use a variety of EMI tools that are available online to calculate loan repayments every month. Modify interest rates and tenure to match your monthly income.
Approach the Bank
Once you have all determined the amount, assessed the banks, and have all the documents ready, you can apply for a personal loan online or by visiting the branch.
A personal loan requires a few important documents that need to be submitted to the bank, It includes income proof, bank statements, salary slips, etc. A copy of these needs to be submitted. The next section will explain these documents in detail.
What is the Eligibility Criterion to Get a Personal Loan?
Understanding the borrower’s eligibility is a crucial step before applying for a personal loan because it will help the applicant find out the right lender and amount the borrower qualifies for.
The minimum personal loan eligibility is:
- The applicant should be at least 21 years of age at the time of loan application
- The applicant’s minimum net monthly income should be Rs. 15,000 – 25,000 (this could vary moderately between banks)
- You should have a CIBIL score of a minimum of 750
- The applicant should have completed a minimum of two years of employment and should have completed one year in the current organization
- Employees working in private companies, public companies, and central, state, and local bodies are eligible to apply
- Should have completed a minimum of one year of stay at the current residence, if rented(Some of these criteria could vary between banks)
There are personal loan eligibility calculators available online that give you a fair idea of your chances of getting the loan. You just need to input your monthly income, loan amount, occupation, and desired loan tenure to understand the eligibility.
Personal Loan Eligibility for Top Lenders – 2021
|Bank||Age Limit||Minimum Work Experience||Minimum Income (Per Month)|
|SBI||Up to 76 years||NA**||Rs.15,000|
|HDFC||21 to 60 years||2 years||Rs. 20,000|
|ICICI||23 to 58 years||2 to 5 years||Rs.17,500|
|Axis||21 to 60 years||NA**||Rs.15,000|
|Kotak Mahindra||22 to 55 years||1 year||Rs.25,000|
|Tata Capital||21 to 58 years||1 year||Rs.15,000|
|IndusInd||21 to 60 years||2 to 5 years||Rs.25,000|
|Ujjivan Small Finance||22 to 58 years||NA**||Above the minimum wage limit|
|India Infoline Finance Limited||25 to 60 years||6 months to 2 years||Rs.35,000|
|HDBFS||21 to 65 years||1 year to 3 years||Rs.15,000 for salaried
Rs.1 lakh p.a. for self-employed
|Indian Overseas Bank||Up to 58 years||NA*||Rs.5,000|
|IDFC First Bank||23 to 68 years||3 years||NA*|
|Federal Bank||21 – 55 Years||3 years||Rs.25,000|
|Punjab National Bank||21 – 58 years||2 years for doctors||Rs.15,000|
|Andhra Bank||21 – 55 years||NA**||NA*|
|Canara Bank||NA**||NA**||Salaried: Rs.6,000 & above
Self-employed – Rs. 1.5 lakh
|IDBI Bank||Up to 75 years for Pensioners||NA**||Rs.1.5 lakh p.a.|
|Fullerton India||21 to 55 years||1 to 2 years||Rs.15,000|
|RBL Bank||25 to 60 years||1 to 3 years||Rs.25,000|
|Bank of Baroda||21 to 60 years||1 year to 2 years||60% of gross monthly income|
|Deutsche Bank||25 to 60 years||NA**||Rs.25,000|
|Karnataka Bank||NA**||3 years||NA*|
|United Bank of India||up to 75 Years||2 years||NA*|
|UCO Bank||21 to 65 years||1 year to 5 years||Rs.20,000|
What are the Documents Required for a Personal Loan?
Depending on the type of applicant, there are a few basic documents that lenders seek to sanction personal loans. Documentation requirement in personal loans is comparatively minimal and hassle-free. Here is a look at the documents usually sought by lenders –
Documents Required for Salaried Employees
|Proof of photo identity (Any One)||Passport, Voter’s ID, PAN Card, Driving License, Aadhar Card|
|Proof of Residence (Any One)||Passport, Aadhar Card, Utility Bill, Ration Card, Driving License|
|Proof of Ownership of Residence (Any One)||Property documents, Electricity bill, Maintenance bill|
|Proof of Income||Salary slips of the last three months along with Form 16.
Bank statement of previous six months of the salary account.
|Proof of Job Continuity (Any One)||Employment certificate from the current employer.
Proof of experience (relieving or appointment letter from the previous employer along with job certificate).
Appointment letter from the current employer (if employment period exceeds two years).
|Proof of Investment (if any)||Fixed assets, shares, fixed deposits, etc.|
|Photograph||One passport size color photograph.|
Documents Required for Self-Employed Individuals
|Proof of photo identity (Any One)||Passport, Voter’s ID, PAN Card, Driving License|
|Proof of Residence (Any One)||Passport, Aadhaar Card, Utility Bill, Ration Card|
|Proof of Residence Ownership (Any One)||Property documents, Electricity bill, Maintenance bill|
|Proof of Office Address (Any One)||Maintenance bill, Property documents, Utility bill|
|Proof of Office Ownership (Any One)||Maintenance bill, Property documents, Electricity bill|
|Proof of Business Existence (Any One)||Tax registration copy, Company registration license, Shop establishment proof|
|Proof of Income||Income tax returns for the previous two years inclusive of computation of income, audit report, balance sheet, profit and loss account, etc.|
|Bank statement||Savings and current bank statements for the past year.|
|Proof of Investment (if any)||Investments such as fixed assets, fixed deposits, and shares.|
|Photograph||One passport-size color photograph.|
Documents Required for NRI Applicants to Get Personal Loan
|Proof of Identity||Copy of your passport, Copy of your visa|
|Proof of Employment||Appointment letter, Job contract, Identity/Labour card (if applicable), Official email ID, or the HR’s email ID|
|Proof of Income||Bank statements of the last 6 months, Salary slips or salary certificates, Recent passport-size photographs|
|Photographs||Recent passport-size photographs|
Documents Required for Pensioners
|Proof of Identity/Age (Any One)||Ration card, PAN card, Voter ID card, Passport, Driving license, School leaving certificate,
|Proof of Address (Any One)||Aadhaar card, Passport, Ration card, Utility bills, Driving license|
|Proof of Income (Any One)||Bank passbook, Bank statements of the last 6 months, Form 16, Income tax returns, Copy of pension payment order|
|Photographs||Recent passport-size photographs|
Also Check: Personal Loan And its Mandatory Documents!
How to Get Instant Personal Loans Online?
- Login to the bank account, app, or any of the bank’s online services where you can apply for the personal loan
- Provide KYC documents along with proof of address and income with the application form. Also, provide a cheque for the processing charge
- The bank will verify the documents, give you the sanction and approve the amount based on your eligibility. This will be followed by the signing of the agreement and other forms. Once this is completed, the funds will be disbursed to your account which may take anywhere between a few hours and a month.
Factors Affecting Personal Loan Eligibility
Credit Score –
If your credit scores are above 750, you are considered a responsible borrower as you have handled your repayments of credit bills and loans well in the past.
Employment Status/Company –
Salaried professionals working in reputed organizations have better chances of securing loans as it indicates professional stability and assures timely repayment to the lenders.
Bank Loyalty –
If a borrower has had a long relationship with the bank, having availed many services, the banks may trust the borrower more due to his loyalty.
Age and minimum income –
Banks usually prefer giving loans to people aged between 21 and 60. There are restrictions for those above this age group. A minimum income is another factor that varies from bank to bank. While some banks require a minimum of Rs 25,000 as the monthly income, a few of them have set the criteria to a minimum of Rs 15,000.
Geographic Location/Housing Situation –
The area in which you live could be a factor in determining your eligibility. That apart, your housing situation also plays an important role. The lenders may prefer those who own a home as opposed to those who live in rented accommodation.
How to Improve Eligibility to Get a Personal loan?
Maintain a Good Credit Score –
Your credit score should be above 750 for you to be eligible to get a personal loan. For this, make sure to pay all your credit bills and EMIs on time. If there is a delay in repayment of existing loans or an inability to pay credits, it will affect the score and in turn affect loan eligibility.
Reduce Debts –
Having multiple loans in multiple banks may not look good. To reduce existing debts to be eligible for a personal loan. Your loans will be swiftly sanctioned if your banking track record is good and you have been disciplined in your transactions.
Use a Co-borrower –
Another borrower from your family – parents or spouses will improve your chances of getting the loan. This is especially important if you may not have a great credit history or your income is not sufficient. In this case, having a co-borrower will give confidence to the lenders.
A personal loan can help you in your short-term needs, cover urgent medical expenses or buy a big-ticket personal use product. Whatever the reason for availing of a personal loan is, it is important to understand the basic eligibility criteria that need to be met to secure this credit. Since most banks and other financial institutions offer personal loans swiftly and with minimum documents, the process is simple and trouble-free. With the right documents, credit history, and employment status, borrowers can choose personal loans from a variety of lenders and opt for the one that meets all their requirements.