Personal loans are one of the most popular financial products that people opt for when they need money for any number of reasons. Many factors make personal loans a preferred choice, such as a quick and easy application process, comparatively low-interest rates, and flexible repayment terms.
However, despite how straightforward the process may be, getting a personal loan involves a few necessary steps, one of which is submitting the required documents for personal loan approval.
When it comes to applying for a personal loan, there are specific documents that you need to submit to your lender to ensure a smooth and hassle-free application process. The list of documents required for personal loan may differ depending on the lender, but here are some of the essential documents that you must keep ready.
- Identity proof: This includes your permanent account number (PAN) card, passport, driver’s license, voter ID card, or any government-issued document that serves as proof of your identity.
- Address proof: This includes your passport, Aadhaar card, voter ID card, utility bills, bank statements, or any other document that can prove your address.
- Income proof: This includes your salary slips for the last three months, your bank statements for the last six months, or your Income Tax Returns (ITR) form for the past two years.
- Employment certificate: This is to prove that you work with a reputable company and that you have a steady source of income.
- Bank statements: This is to verify your financial habits and to ensure that you have the required minimum balance in your account.
Apart from these essential documents, some lenders may ask for additional documents such as your educational qualifications, professional degrees, and proof of investments such as mutual funds, shares, and fixed deposits.
While compiling the required documents for a personal loan, ensure that you have them in the correct format, such as digital copies or hard copies, depending on the lender’s requirements. Also, ensure that all your documents are up to date and not expired.
Once you have submitted all the necessary documents for a personal loan, the next step is to pay the processing fee for a personal loan. This fee is charged by the lender for processing your loan application, and it can range from 1% to 2% of the loan amount. However, the processing fee varies depending on the lender, the loan amount, and the tenure of the loan.
It is essential to understand the processing fee for personal loans as it can add to the overall cost of borrowing. Therefore, it is best to compare the processing fees charged by various lenders before you decide on one.
Another crucial factor to consider while borrowing a personal loan is the pre-closure charges for a personal loan. These charges are levied if you decide to repay your loan before the end of the loan tenure. The pre-closure charges for personal loans can range from 1% to 5% of the outstanding loan amount, depending on the lender.
It is crucial to determine the pre-closure charges for a personal loan, especially if you plan to repay the loan before the end of the loan tenure. Keeping this in mind, it’s best to compare the pre-closure charges for personal loans across various lenders before you opt for a loan.
To conclude, fast-tracking your loan application involves submitting the required documents for a personal loan and paying the processing fee for a personal loan. The list of documents required for a personal loan may differ depending on the lender, but the essential documents remain the same. Additionally, it’s crucial to keep in mind the processing fee for personal loans and the pre-closure charges for personal loans while opting for a personal loan. By keeping these factors in mind, you can make the borrowing process straightforward, hassle-free, and quick.