Documents Required For A Personal Loan - Personal Loan Blog - Tata Capital

Documents Needed to Take up a Personal Loan

Mar 01, 2017

Mr. Deepak Kumar, a 50-year old salaried individual is on the verge of retiring. He aspires to fly abroad for an international vacation with his family. Mr. Deepak, therefore, seeks to avail of a personal loan to finance his vacation expenditure. However, he is confused over the documentation required to be submitted for his personal loan application.

Like Mr. Deepak, many potential loan borrowers are unaware of the papers required by banks and lending institutions during loan application. Failure to produce all required documents may lead to loan rejection. Hence, it is necessary to have knowledge about such loan-related details.

Following is a list of documents that have to be submitted for a loan application, along with a duly-filled application form.

  1. Identification proof
    Banks and lenders require loan seekers to provide Know Your Customer (KYC) documents for the purpose of identification. Applicants may submit any one of the following documents; PAN card, driving license, Voter's ID card, or passport. Additionally, you may provide any supplementary identification documents like a birth certificate or school/college leaving certificate.
  2. Proof of residence
    Salaried individuals, self-employed professionals, and businessmen need to submit proof of their residence. They may submit any one of the following, passport, Leave and License Agreement, electricity bill, ration card, telephone bill, or Aadhar card.
  3. Job verification documents
    Personal loans, also known as unsecured loans, do not require collateral against the loan. Hence, lenders require applicants to submit income proof to ascertain that they have a steady income to repay the loan. For this purpose, they may have to provide salary slips, preferably for the last three months and any other specific document required by the lender.
  4. Other financial statements
    In addition to the above-mentioned personal loan documents, individuals may also need to submit any other financial statement as requested by the bank or lending institution. One such document includes Income Tax Returns (ITR). Additionally, they may have to provide a bank statement for the last three months.

Businessmen and self-employed individuals have to submit additional documents stating proof of the business. The required papers are Balance Sheet statement and Profit and Loss Statement for the last two years audited by a Chartered Accountant, past six months bank account statements as well as proof of continuity of business, namely Trade License, Sales Tax Certificate, certified copy of Partnership Deed, Memorandum of Association (MOA), and Articles of Association (AOA).

The personal loan documentation requirements vary from lender to lender. Hence, it is necessary to assess the documents that have to be provided before applying for a loan. Having such loan-related knowledge will reduce your risk of application rejection.

It is also imperative to file all the documents in proper order for submission. Only once all the papers are in place, the lenders will go ahead with the approval process. The bank or lending institution may conduct a verification process to cross-check the details provided by you. On the completion of all the formalities, the loan application is approved and disbursed.