India’s Demonetization in late 2016 gave way to a widespread emergence of paperless services. The finance industry realized the opportunity and potential of cashless transactions. As a result, banks and NBFCs included online KYC verification processes, or paperless document verification, in order to reduce the lengthy processing time of loans.
More than a decade ago, applying for a loan was an extremely tedious and lengthy process, filled with paperwork and high terms and conditions. Even if you met the bank’s high eligibility criteria, these loans were secured; meaning, borrowers would need to pledge their assets (of equal value to the amount they are seeking to borrow) as collateral against the loan.
After taking the time to ensure you’ve arranged for the plethora of documents, filled out the enormous volume of paperwork, and went through the trouble of ensuring you had the required value of assets to submit as collateral, the lender would assess your form and either approve or reject your loan. What’s more, is that after going through all the hassle of making sure your application and collateral was in order, you would have to wait several weeks or more for an update on your loan status.
This is why lenders and NBFCs are striving to improve their services in order to give their customers a user-friendly, end-to-end digital experience. With online documentation, submission and verification, new-age lenders have been able to drastically reduce the loan turnaround time, which immensely benefits both the lender and borrower. In addition, these loans are completely unsecured- meaning, no collateral is required to avail them.
Once all the details are submitted, the lender will verify the authenticity of your details and documents. The details provided in the application such as CIBIL score, income-to-debt ratio, and other data points will also be assessed. After the lender has reviewed your application, you will get an approval or rejection notification in as less than 24 hour. This is because the borrower’s documents and details are immediately accessible by the lender online, as compared to manual document submission with bank loans which can take weeks to reach the concerned person for review.
As these loans are unsecured, the lender has a higher default risk of a borrower to default on repayment. That’s why there are a set of specific documents required for lenders to assess a borrower’s financial stability. If you’re in the process of applying for a loan, make sure you have the following original documents, as well as self-attested digital copies of the same, for a smooth and easy application process.
- PAN card: This is a common identification document that is useful for loans, because it verifies both the identity of the borrower, and their income tax details. With PAN card as a document for personal loans, it eliminates the need of submitting additional income verification, namely, Form 16.
- Salary slip: This is required because it verifies the borrower’s income, as well as the borrower’s employment details. If your company does not provide salary slips, you can request the same from the HR Department.
- Bank statement: The purpose of bank statements for your loan application is to verify that the salary gets credited to the account. It also helps lenders to understand the borrower’s income-to-expense ratio, and whether the borrower can comfortably afford to repay a loan.
- Address proof: Utility bill, rent agreement, or passport are address proofs that can be submitted for your loan application.
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With mobile-based application forms, fintech companies like Upwards have made the loan application process simpler for salaried employees. You can now apply for a personal loan straight from your smartphone!
Do ensure that all the documents are original and match the details you have shared in your application. Any discrepancies, even signature mismatches, will get your loan application rejected immediately- and if this happens, you’ll only be able to re-apply for a loan after 90 days.Therefore, keep your documents required for personal loan ready to submit, and you’re set to go!