Required Documents for Personal Loan

Personal Loan Documents Required

One of the option to get money from reputed banks for all needs is through personal loan. Whether going for a vacation or to buy a best gift for your sibling, make use of the personal loan option! To apply successfully for a personal loan a borrower needs to provide certain set of documents. These documents helps lender (be it a Bank or a NBFC) to know and understand the financial stability of the borrower and analyse the credit risk. Apart from that it helps a lender know and verify all the details about the applicant such as age, income, address, employer and employment. It is on the basis of this a lender decides whether to lend or not to the applicant. As personal loans are unsecured loans, the lender does not takes anything as collateral for the lending amount, hence there is always a potential risk of borrower defaulting or absconding on the loan. Hence to be double triple sure a lender asks for a certain set of documents so that it can learn and analyse the applicant and then decide. Below are the checklist for all the required documents for a personal loan.

Checklist of Documents Required for Personal Loan

  1. Photo Identity Proof
  2. Residence Address Proof
  3. Residence Ownership Proof
  4. Income Proof
  5. Job Continuity Proof
  6. Bank Statement
  7. Investment Proof
  8. 1 passport size color photograph

List of Common Documents Required for Personal Loan

Here is the list of common documents that should be submitted irrespective of which bank you are applying and where you are located.

  1. Complete loan application form with one passport size photograph.
  2. Valid Proof of Applicant's Identity: Voter ID Card/Passport/PAN Card/Driving License
  3. Proof of Residence: Ration Card/Passport/Utility Bill
  4. Proof of Age: Voter ID Card/Passport/PAN Card/Driving License
  5. Financial Documents:

    a. Salaried Individuals: Latest 3 month's Salary Slips and Form 16, Bank Statements of 6 months

    b. Self Employed Individuals: Latest 1 year bank statement for both savings and current account

Documents Required for Salaried Individuals

  1. Valid Proof of Applicant's Identity (any one of the following): Voter ID Card/Passport/PAN Card/Driving License
  2. Proof of Residence (any one of the following): Ration Card/Passport/Utility Bill
  3. Proof of Age (any one of the following): Voter ID Card/Passport/PAN Card/Driving License
  4. Income Proof: Latest 3 month's Salary Slips and Form 16.
  5. Job Continuity Proof: Current Employment Certificate or Current Job Appointment letter and Experience Certificate
  6. Bank Statement: Latest 6 month's statement from bank
  7. 1 Passport size color Photograph
  8. If there are existing loans submit Payment Track Record and sanction letter

Documents Required for Self Employed Professionals

  1. Valid Proof of Applicant's Identity (any one of the following): Voter ID Card/Passport/PAN Card/Driving License
  2. Proof of Residence (any one of the following): Ration Card/Passport/Utility Bill
  3. Proof of Age (any one of the following): Voter ID Card/Passport/PAN Card/Driving License
  4. Office Address Proof: Property Document/Maintenance Bills/Utility Bill
  5. Office Ownership Proof: Property Documents/Maintenance Bill/Electricity Bill
  6. Business Existence Proof: 3 years old Salary Statement/Shop Establishment
  7. Income Proof: Latest 2 years Income Tax Returns including Computation of Income/P&L Account/Balance Sheet

Documents Required for Senior Citizens/Pensioners

  1. Photo Identity Proof: Passport/ Driving License/ Voter ID/ PAN
  2. Residence Address Proof: License/ Registered Rent Agreement/ Utility Bill
  3. 1 Passport size color Photograph
  4. Age Proof Document: Pan Card or Passport
  5. Income Proof: Pension Returns or Bank Statement

Personal Loan Application Form

Personal Loan Application Form is the used by applicant to request banks to consider their requirement of personal loan, post validation of all details in the application form the bank with process the loan and will let you know the next steps to get the required money.

Why Bank Statement is necessary for getting a Personal Loan?

Applying for a personal loan is not a difficult task as most of the time the personal loan is unsecured. Applicant does not need to provide any as the security for getting the personal loan. Bank statement is very crucial for personal loan as it is vital proof of income. For salaried person bank statement is the evident to prove the eligibility of personal loan as well as repayment of the loan.  Bank statement is also one of the important proofs that the salaried person need to provide as it specify the ability of loan taker to repay the loan.

What is bank statement?

A bank statement or account statement is a summary of financial transactions which have occurred over a given period on a bank account held by a person with a financial institution or a bank. Usually for the application of personal loan one requires to submit the bank statement of last six months. Since the bank statement is something that is recorded by a bank it is not quite under your control which leads to reduce the chances of error or cheating. Bank statement is made monthly to specify the income generated & expenses paid. All the income as well as expenses transactions are recorded in the statement. The opening balance from the previous month added to the total of all transactions during the period results in the closing balance for the current statement. The bank statement lists checks paid, total withdrawals, total deposits, interest earned and service charges or penalties incurred on an account. In addition, it provides the beginning balance, ending balance, statement date, transaction date for each transaction, payee, customer name and address, statement period, the account holder’s account number and the bank’s customer service number.

Importance of bank statement for getting personal loan

There are multiple reasons why bank statement is so crucial for a salaried person to get the loan. The importance of the bank statement is not just merely specifying the ability of loan taken for the repayment but also many other details can be justified through the bank statement. Following are some vital factors which makes bank statement so important for personal loan:

  1. Bank statements confirm your identity

Firstly the bank statement verifies your name and current address. Straight away, if your name or address is different from what you completed on your application form, this will cause further questioning and can hamper your assessment process.

  1. Bank statements confirm your income

Irrespective of what you say your income is on your personal loan application, bank & financial institute will still verify this by checking the salary deposits into your bank account. If the figures don’t match, the lender will rely on the income they see on your statements as this is clearly the income you are living off. This is also an opportune reminder that cash-in-hand jobs are considered unacceptable income. People accepting cash in hand work are avoiding paying tax and are effectively breaking the law.

  1. Bank statements shows your reliability

If you have any current loans, a lender will check your statements to see how efficient you are with your loan repayments and will also look for any discredits. If you handle your current loans well, this will go a long way towards you being approved for another personal loan. On the other hand, if you are terrible with your loan repayments and are even in arrears, the likelihood of you getting approved will be far less if at all. You may have a very valid reason as to why but if it is just due to poor money management you will need to work on improving your situation before you next apply.

  1. Bank statements show if you can afford a new personal loan

Bank statement specifies if you are left with enough money to pay the installments of another personal loan or not. If you are charged with the penalty for the failure of your current loans then it infers that you are unable to afford a new personal loan. Banks & financial institutions must be accountable when approving personal loans, whether it is a car loan, bond loan or even a small cash loan.

It is quite clear that your bank statements reveal a great amount of information and help lenders determine whether a personal loan should be approved. So, it is very important for you not to overlook your bank statement & make sure to establish goof records of your bank transactions in advance as they are unchangeable.