Documents you need before you apply for a personal loan
The process of applying for a personal loan is much more straightforward than that of getting a housing loan requires less documentation and faster approvals. The most common documents banks or finance companies need you to submit are proof of residence, identity, Form 16, bank statements and your latest salary slip. These of course may not be standard across all finance companies offering personal loans and some may require you to submit a few additional documents for verification.
Once you have submitted your documents, verification and processing may take upto a week. And public sector banks such as State Bank of India or Bank of Baroda may also ask for a guarantor even if they don’t ask for any collateral. They may require you to provide a guarantor even if you are an existing customer with an excellent track record. Production of all necessary documents is essential for a quick approval of your loan as your funds will not be released till the bank has verified all the information you submitted at the time of approval.
The most common documents you will be asked to submit when applying for a personal loan other than a passport size photograph are:
Proof of identity
Documents that can provide a proof of identity when applying for your personal loan may include a copy of your passport, driving licence, voter ID, PAN card, a credit card with photograph or employee identity card which are as an identity proof and signature proof. Very often employee identity cards are accepted only in the case of government employees or staff of government owned undertakings. Some banks may also refuse to accept driving licence as a valif proof of identity.
Residence proof
Banks offering personal loans will accept a copy of your passport, ration card, voter ID, or LIC policy as a residence proof. In case your present address is different from that given in these documents you can produce a telephone bill, electricity or water bill as your proof of residence. Some banks insist on proof of residing at least one year at the present address as they want to make sure that you reside within the city limits.
Proof of income
Documents you are required to submit as proof of income differ depending on whether you are salaried or self-employed.
If you are salaried banks will require you to submit your:
- Latest salary slip
- Form 16 for the last financial year
- bank statement for the last 6 months
There are banks, which seek bank statement for only three months. Professionals and government employees may be required to submit a proof of highest qualification for which a copy of your degree certificates are required.
Self-employed applicants will have to submit
- IT returns for the last 2 years
- balance sheet and profit and loss account
- proof of office lease such as utility bill, municipal tax receipt or title deed
Some banks will ask for proof of turnover (latest sales / service tax returns) and a proof of continuity in current profession which can be IT returns or certificate of business continuity issued by the bank.
