Personal loans are the perfect dose of financial solution for any businessman or a self-employed individual. It can be a great flexible alternative if you want to fulfill your urgent financial needs. Anyone with a regular flow of monthly income be it a salaried or a self-employed individual can apply for a personal loan. This can help you solve the temporary liquidity problems. Banks usually consider factors like income level, credit and employment history of the applicant including their repayment capacity. Credit score also plays a vital role, which can directly affect the rejection or approval of your loan application.
Personal Loans in India have become a popular liquidation method, which is being by both salaried employees and self-employed to boost their financial conditions.
Mandatory Documents While Applying for a personal loan
- A completely filled & signed Loan application form with Applicant’s Photograph
- Identity and Address proof
- Income Proof
- Processing fee cheque
These are some of the basic documents that all financial institutes demand, before sanctioning any type of the loan. The mere purpose of these documents is to validate all the residential details and financial conditions of the applicant, in order to verify his/her financial capacity and liabilities.
Documents that salaried person needs to submit while applying for a personal Loan:
- Identity proof: Valid Passport, Valid Driving License, Voter ID (any one)
- Address Proof: Ration card/passport/telephone/rental agreement/electricity bill
- 6 months bank’s copy of passbook or last 3 months bank statement
- Recent salary slip of last few months and current salary certificate.
- Latest Form 16
The bank needs to verify that the applicant has a stable job and will be able to repay the loan, in the long run.
Documents A self-employed professional needs to submit while applying for a Personal Loan include:
- PAN Card: For Company /Firm and Individual
- Identity proof: Passport/ Driving License/Pan Card /Aadhaar Card/Voter’s ID card (anyone)
- Address proof: Aadhaar Card / Voter ID-Card /Passport/Driving License (anyone)
- Bank Statement of your last 6 months transactions
- Latest ITR along receipt with computation of income, and a recent Balance sheet of your business along with the Profit & Loss a/c which should be a CA Certified /Audited, for the last 2 years
- Proof of continuation
- Apart from these documents, you have to submit some other compulsory documents which are – Sole Proprietorship Declaration/Certified Copy of the Partnership Deed (if the business is in partnership), Certified original copy of Memorandum and Articles of Association (certified by Director) and Board Resolution (Original)
All these documents are required to ensure the longevity of the business, which will determine whether the applicant will be able to repay the loan or not.
Personal Loan for Self Employed vs Salaried
The process for applying for a personal loan in both these categories follows almost the same procedures. The eligibility criteria also remain the same, which is that the applicant should have a regular flow of monthly income.
Age Limit For Applying for Personal Loan for Self Employed vs Salaried Individual
Salaried – Most banks allow applicants from 21 to 58 years old with a constant job and a decent regular income to apply for a personal job.
Self Employed – Most self-employed are granted loans if they are above the age of 23 and if their business has been running for over 2 years in the market. This will ensure that the bank does not invest in any business which is near its doom.
- Loan Amount Limit
Salaried – A salaried employee can apply for 20 times his/her monthly salary as a loan amount. This can range between 25,000 to 40 lac, depending on the salary of the applicant. Some banks also consider the salary of their spouse while granting the loan, which can also affect the loan limit for different individuals.
Self Employed – The minimum limit for applying a personal loan for a self-employed professional can exceed above 1 lac, as they have more potential to earn profits, which make them capable of lending more money. This can range between 50,000 to anywhere around crores depending on the revenue of your company.
So now that you know what are all the documents are other financial proofs that you require for applying for a personal loan, go ahead and feel free, to pursue a stable financial life, where you can use this external flow of income to fulfill all you needs and dreams, without touching your savings. Make sure to keep all of these documents ready if you’re planning on applying for a loan, as the bank might require this information to analyze your financial stability and repayment capacities. And salaried or self-employed ensure to discuss all your confusions or queries with the bank officer before signing that loan agreement.