After the central government of India initiated demonetisation, the country has witnessed several changes in its financial landscape. As it continues to undergo financial changes, credit options like personal loans have seen a significant rise in their demands. In this changing landscape, as the importance of this financing option continues to grow, individuals planning to avail funding must be well aware of the personal loan process.

We thus bring you detailed information regarding what you need to know when availing the advance. Take a look.

The Personal Loan Application Process – Steps to Follow

The lender requires you to complete the following steps to apply for a personal loan.

Fill up the application form

To start with the personal loan process, the first step involved is filling up the application form. Some of the best lenders enable application form fill-up both online and offline to meet borrower suitability.

It is, however, more often than not, prefer to go for the online application submission due to the convenience involve. When filling up the application form online. All you need is to access your selected lender’s official website and navigate to the application form hosted. You can then proceed to fill in the form with necessary personal information along with financial and employment details. Make sure to fill in all the details correctly for streamlined verification and processing of the loan.

If opting to apply offline, you would need to approach the nearest branch of your lender to complete the initial application form fill-up requirement. Either way, once you have submitted the application form, the following steps ensue.

Submit the documents required

Next, you would need to provide the necessary documents that establish your eligibility for the advance. Make sure that all the documents are update and meet the lender’s verification requirements. To ensure the paperwork is in place, you can get ready with the necessary documents well in advance. The standard document requirement related to a personal loan process includes – 

• ID Proof: PAN card, voter ID card, Aadhaar card, driving license, passport, or any other photo identity proof approved by the central, state or local authority.

• Proof of address: Aadhaar card, voter ID card, passport, driving license, ration card, utility bills, or any other government-approved document carrying address.

• Proof of employment/occupation: Employee ID card/Business registration certificate, company incorporation certificate, partnership agreement, etc.

• Income documents: ITR, salary slips, bank account statements, financial statements (for self-employed), etc.

• Business continuity documents (For self-employed): Financial documents like balance sheet and profit and loss statement for three previous years.

• Employment continuity documents (For salaried): Salary slips, ITR filed for one previous year, etc.

Keep the documents ready before applying for a fast-tracked loan processing.

Complete lender verification

Once you have submitted the application form along with the required documents. The lender sends in representative/s for verification of applicant along with all the provided details.

You would need to cooperate with the approaching representative to complete the personal loan process for verification successfully. In case you carry a low credit score. You may also be required to provide a guarantor who can vouch for your financial stability. During verification, make sure that the guarantor mentioned is present too for successful completion of the process.

Loan sanctioning after due consideration from lender

Successful completion of loan application and applicant verification results in loan sanctioning. However, the loan amount and other terms of lending critically depend on different financial parameters that you fulfil.

For instance, if you fulfil the minimum monthly income requirement of Rs.15,000 set by a lender. And the income just a little higher than the benchmark, say Rs.20,000. In that case, the loan amount sanction would be proportionate to your repayment capacity.

Contrarily, an individual with a higher monthly income of say Rs.40,000 would be eligible. To a much higher loan amount proportionate to an increase in the repayment capacity.

Note that an individual’s repayment capacity is determined based on his/her total monthly income. Minus the expenses and fixed monthly liabilities. Based on this calculation, the loan amount and a suitable repayment tenure one is eligible for is determined by the lender. On this basis, the EMIs are calculated for the personal loan process to follow, which remain easily within the borrower’s repayment capacity.

Before applying for a personal loan, you can determine your repayment capacity. And the suitable amount of EMIs payable each month with the help on dedicated financial tools like EMI calculator explained later. Having a repayment estimate beforehand shall help you make an informed borrowing decision. 

Similarly, other factors like credit score, creditworthiness and the overall risk involved in lending to the individual also contribute in determining the terms involved. 

During loan sanction, an applicant is thus issued or handed over a sanction letter that carries all the terms related to the personal loan. They include the loan amount, the tenure for repayment, EMIs payable, interest rate applicable, and such other essential details. If the applicant agrees to all the terms, he/she can sign the acceptance and return it to the lender for the next processing steps to follow. If not, he/she can negotiate for favourable terms with suitable documentation and leverages like employment stability, higher income, etc.

Receive loan approval and disbursal

Once the sanction letter is sign and hand back to the lender, the latter initiates the personal loan approval process. While the explained process may look lengthy, some of the best lenders make the entire process easy to complete by bypassing some steps for quick approval of the loan. 

Thus, with such lenders, eligible applicants can expect quick approval of the personal loan application within a few minutes of applying. Once approved, the loan amount is set for disbursal to the borrower’s bank account.

As a personal loan comes with zero restriction to end-use, the borrower can address any personal or professional funding need with the loan amount received.

Use of EMI Calculators for Monthly Instalment Computation

As mentioned earlier, it is a smart way to assess your EMIs before initiating the personal loan process, so you experience hassle-free processing of the advance. You can complete the following steps to estimate your personal loan instalments payable with the help of an EMI calculator.

1: Visit the lender’s website and navigate to the page hosting the EMI calculator.

2: Next, enter a suitable loan amount you seek to avail into the calculator.

3: Proceed to enter the other required values, i.e., the repayment tenure as you find suitable and the interest rate set by the lender.

4: Once all the values are provided, you can view the EMI value on the screen. Continue to change the loan amount and tenure values to arrive at a suitable EMI value that remains economical as per your repayment capacity.

Once you have arrived at an affordable installment option. You can proceed to apply for a personal loan by filling up the application form. 

Note that it is essential to select a suitable loan amount that does not strain your finances during monthly repayments over the time. You should also check your credit score and take necessary steps to improve it well before initiating the personal loan process for improved chances of hassle-free approval.

Also, learn more about loans from the Hero FinCorp website.