Personal Loan Application Process

When you need extra money for family and personal emergencies such as a wedding or hospitalisation, you might decide to go for a personal loan. Personal loans are a convenient way of getting additional funding because they require fewer documents and are processed faster than any other retail loan.

How to Apply For Personal Loan?

There are several ways to apply for a personal loan:

1. Personal Loan Application Process Online

If the personal loan applicant has an existing relationship with the financial lender, he/she can apply for a personal loan via his/her net banking account and could possibly be eligible for a pre-approval. For other customers, they can apply for a personal loan online by following the steps mentioned below:

• Visit the website of the financial lender.
• Under the loan section, choose personal loans.
• Click on the ‘apply now’ option.
• Enter the details in the personal loan application form and submit it to the bank.
• The bank will assess the eligibility of the applicant and request for the submission of the required KYC documents and income documents.
• If the applicant is found eligible, the bank will disburse the loan amount to the bank account of the applicant, as mentioned in the application form.

2. Personal loan application offline

Listed below is the process of applying for a personal loan at the branch of the financial lender:

• Visit the branch of the financial lender.
• Procure the personal loan application form and enter all the required details.
• Submit relevant documents that prove one’s income, age, address and identity.
• The lender will then verify the documents and check the eligibility of the applicant.
• The loan amount will be transferred to the bank account of the applicant if he/she is found eligible.

3. Email and phone banking requests:

You can leave a request for personal loan with the bank through an email or at the customer service centre of the bank. The bank will review your eligibility and contact you to take the process further.

4. Request through ATM machine:

Nowadays you can apply for personal loan via ATM kiosks as well. Once you raise a request the bank personnel will contact you.

How Personal Loan Applications are processed

The process of sanctioning of a personal loan is simpler than property loans such as home loan and car loan. This is because, in case of property loans, the bank has to verify not just your financial information, but also the credibility and eligibility of the asset that you are purchasing with the loan amount. For personal loan, you are the collateral security yourself, so the bank has to do a background verification only on you.

• Once the bank receives your loan application, it will check the information provided by you against the data available with them, such as bank balance, salary deposits made into your account, EMIs being deducted from your account, etc.
• The bank will cross-check and confirm your identity and address details through your Know Your Customer (KYC) documents. Banks may visit you at home to confirm your place of residence and check with your office on your employment tenure.
• The copy of your Income Tax Return or salary payslips will help the bank gauge your repayment capacity. This will help determine how much loan amount the bank is willing to sanction to you.
• Some banks might ascertain your credit-worthiness by finding out your CIBIL score. The higher the CIBIL rating, the more your chances of getting the loan approved.
• The bank will also review your age, number of years of employment left, and salary growth prospects, to decide how much loan it can approve for you and what the repayment period should be.

The two key elements in ensuring approval for your personal loan application are to maintain a credit score of 750 or more, and to ensure that you provide all the documents sought by the bank. Once the loan is availed, the onus of repayment lies with you and the bank can levy penal interest on outstanding balance if EMI is not paid on time. If you miss several EMIs, the bank can also take legal action.

Documents required to apply for a personal loan

• Proof of age and identity – Passport, Aadhaar card, Voter ID card, etc.
• Proof of residence – house registration certificate, sales deed, Aadhaar card, Voter ID card, etc.
• PAN Card
• Proof of Income – Form 16, Salary slips, Bank statements, Income Tax Certificate, etc.
• Passport-size photographs.
• Duly-filled and self-attested personal loan application form.

How will I know if my personal loan application is approved?

Personal loan applicants can check the status of their application on the website of the lender, by calling the customer care unit or at the branch of the lender. To check their personal loan status, the applicant will have to use the personal loan application reference number, registered mobile number, and date of birth. That said, when the lender approves the personal loan, the same will be communicated via SMS, email or on his/her registered mobile number.

FAQs on Personal loan process

1. What are the reasons that could result in my personal loan application being rejected by the financial lender?

   The financial lender would have rejected your personal loan application possibly because you did not meet the eligibility criteria with regard to the minimum income requirement, age, work experience, CIBIL score, past repayment history, etc.

2. Should I make multiple personal loan applications to improve my chances of being eligible?

   No, you should not make multiple personal loan applications with a number of lenders as each application rejection will affect your credit score. Once you have checked your eligibility, make an application with just one lender.

3. Is there a fee for the personal loan application form?

   No, the personal loan application form can be downloaded or procured at the bank branch for free.

4. Will the processing fee be more if I apply for the personal loan online?

   No, the processing fee will be same if you apply for a personal loan online or offline.

5. Is it possible to get a personal loan instantly?

   Yes, if you have an existing relationship with the bank and are a pre-approved customer, the personal loan will be disbursed almost immediately.