A personal loan is issued by financial institutions (banks or non-banking finance companies) to individuals. It can be used for things such as medical bills, car repairs, weddings and travel, home renovation, or education. All the banks need a few documents and eligibility criteria to approve the personal loan.
The minimal documentation required while availing of a personal loan makes it one of the most sought-after loans online today. It can be seen as an alternative to traditional bank loans or credit cards. These require more paperwork to get approved. If you are looking for personal loans with minimum documentation needs, here’s what you should keep in mind before you take the next step.
What is a personal loan?
A personal loan is a type of unsecured loan. It helps with personal expenses. It is not similar to a car loan or home mortgage. These are secured by a car or home, respectively. But with a personal loan, you don’t have to put up any collateral.
The lender will check your reliability. They will approve or deny the application based on that. Lenders will also look at your income, debt-to-income ratio, and other factors. After this, they will approve the application.
It’s important that you submit all the required documentation when applying for a personal loan. So there are no delays in getting your money once you’ve been approved.
What are the basic eligibility criteria for a personal loan?
Below is a list of common documents:
- Proof of identification with photo and signature (passport, driver’s license)
- Income proof or work status (pay slip, employment contract). You can be a salaried person or a self-employed person
- Proof of residence (rental agreement, utility bill)
How to avail of a personal loan with minimum documentation?
There are 3 things you need to keep in mind to avail personal loan with minimum documentation.
Must have a good CIBIL score
If you have a high credit score, generally 750 or higher, you stand to benefit from lower interest rates. For personal loans, lenders will check your credit scores. High credit scores also enable you to receive pre-approved personal loan offers. You get this from lenders with whom you have an existing relationship.
Consider paying off any balances on your credit cards. Repay any outstanding debt before applying for a loan. This will help boost your credit score. Thus, it will result in a better interest rate on your loan.
Maintain good relationships with lenders
Individuals who want to get a personal loan without documentation should approach banks and other institutions. From here, they can get a loan and loan facilities. These institutions may not require additional documents. Also, depending on your credit history, these lenders may already have pre-approved offers for you.
For instance, your bank/NBFC might have checked several things. For instance, it could be your transaction patterns, deposits (recurring deposits, fixed deposits, etc.), and investments. They will do it while evaluating your personal loan eligibility.
Get a loan from a digital financial platform
You can get a loan from a digital financial platform if you are in urgent need of cash. You can also take it if you don’t meet the requirements for pre-approved loans with your existing banks. You need to approach lenders offering end-to-end digital loan processing. Many lenders now offer this service online. They process requests for personal loans without you leaving home. They are, therefore, able to process loan requests in a much shorter time.
Who can avail of a personal loan with minimum documents?
You need to have basic KYC information. This includes:
- loan repayment history
- income details
- address proof
- Aadhar number
As long as the lender has these details, they offer personal loans with minimum documents to you. As a result, existing customers do not need to submit too many documents.
Customers don’t have to bring hard copies of the required documents to many banks and NBFCs. This is from applying for the loan to getting it in the account. So, if you are looking for a ‘paperless’ personal loan, you can get it from them.
Such lenders approve personal loan applications very quickly. They will simply check the documents uploaded during the application process. Selected customers can also get pre-approved or pre-qualified for personal loans from their lenders. This can be for new-to-credit customers.
Pre-verified credit profiles allow lenders to make loans in no time. It begins when the loan application is received without any fresh documentation.
Tips to improve getting a chance to approve a personal loan
An important factor that lenders consider is your credit score. A high credit score makes getting a personal loan easier. If you have a low score, you should check your credit report to see if there are any errors. Notify CIBIL if you find any simple errors. These may have adverse effects on your score.
Having a healthy debt-to-income ratio is helpful. It means balancing your income and debts when applying for personal loans. To increase your chances of getting a loan, you should consider selling liquid assets. For instance, you can increase your income by investing in stocks or working part-time.
You should limit your borrowing:
If you need a specific amount, make sure you calculate it first and only apply for that amount.
It is important to select the right lender. This will be based on the credit score and income criteria that each lender has. Pick a lender that meets your eligibility criteria. Apply accordingly when looking for personal loans. If you apply to several lenders, each will obtain your complete credit report. This will lower your credit score each time.
In conclusion, getting a personal loan online with the minimum documents is very easy. As you know, a personal loan is a type of unsecured loan. You can use it to meet your expenses or repay some debts with ease. The approval of a personal loan with minimum documentation mostly depends on your credit history, reliability, and CIBIL score. That’s because this type of credit is unsecured. In many cases, lenders offer personal loans quickly and with little documentation required. They only need proof of address and identity. Check out our website, Piramal Finance, to learn more about personal loans. Find the minimal documents needed and connect with us for further details.