There are different types of loans that financial institutions offer, and one of them is personal loan. A personal loan is preferred by many borrowers because of the flexibility that they provide. Unlike a home loan, which can only be used for a certain purpose, a personal loan, as the name suggests, can be used for any personal expense. Whether you are planning on taking an overseas trip, financing a wedding, or clearing off a couple of unpaid bills, you can make use of a personal loan for financial assistance.

Now, before going ahead and applying for a personal loan, it is important to first be aware of the documents that lenders require from applicants. So, take a look at the following personal loan documents that you need to submit to your lender:

Proof of identity

  1. Driving license
  2. Aadhaar card
  3. Passport
  4. Voter ID

Proof of address

  1. Aadhaar card
  2. Passport
  3. Driving license
  4. Ration card
  5. Utility bills (electricity bill/light bill)
  6. Rent agreement

Proof of signature

  1. PAN card
  2. Passport

Documents required for salaried individuals

  1. Bank statements for the past 3 months that include income details
  2. Salary slips for the past 3 months

Documents required for self-employed individuals

  1. Income Tax Returns for the previous 2 years
  2. Balance sheet for the profit and loss of the business in the last 2 years
  3. Business proof (registration certificate, business license, and GST number)

So, these are the documents required for personal loan. Do keep in mind that not every financial institution will have the same documentation requirements. This is why it is very important to inquire with the lender about the specific documents that they need before applying for a personal loan. This will ensure that the documentation process is done without any hassles.

Now that you are aware of the general list of documents that lenders need for a personal loan, you can go ahead and apply for one. However, before doing so, keep the following tips in mind:

Maintain a decent credit score

It is very important to make sure that you have a good credit record before applying for a personal loan. Every lender checks an applicant’s credit score before approving a loan, which is why it is advisable to maintain a credit score of 750 or more.

Choose your repayment tenure wisely

Choosing a suitable repayment tenure is very important to comfortably pay off the loan’s monthly installments comfortably. Also, do note that the interest you pay will also be impacted by the tenure you choose.

Make use of a personal loan EMI calculator

Using a personal loan EMI calculator will help you be aware of the loan’s EMIs beforehand. This will help in deciding whether a particular loan plan is suitable or not.

Keep the above-mentioned tips in mind before you apply for personal loan, as these can help in getting a good deal on the loan plan.