Applying for a new loan? Confused over the documents that you have to submit? Check out these top five documents that you have to submit at the time of loan application. Prepare these beforehand to improve your chances of approval.
Very often life throws you in unforeseen situations, where you’re strapped for cash. This is where “Loans” come in. A loan is a financial product where a lender lends you money at an interest. You then have to repay the loan amount in fixed EMIs every month. The EMI includes both the principal and interest.
While there are several different loan products in India, almost all of them require you to submit a set of documents, before you can avail the loan amount. While these sets of documents vary depending on your lender, most lenders ask for the following.
- Bank Statement
Irrespective of whether you’re applying for a new home loan or a vehicle loan, all lenders ask you to submit your bank statement for the last six months. The bank statement is nothing but a record of all the transactions carried out in your bank account for the last six months or so.
Since the bank statement is generated directly by the bank or financial institution where you hold a savings account or a current account (in the case of self-employed applicants), there are no chances for the borrowers to tamper with it.
Here are the three reasons why bank statements are essential when applying for a loan:
- It establishes your identity
- It confirms your income levels
- It establishes proof for your reliability and repayment capability
- Proof of Identity
This one’s vital. After all, the lender has to verify whether you’re the person you claim to be. This can be any one of the following documents:
- Valid Passport (that doesn’t expire for the next six months)
- Aadhar Card
- Voter ID
- Driving License
- Address Proof
Your lender will require proof of your address. This is to establish whether you’re residing in the address you have submitted on your loan application.
You can submit any one of the following documents to establish your address proof:
- Ration card
- Telephone bill/Electricity bill/Water Bill (you’ll have to submit the latest bill as well as one from the last year)
- Rental agreement
- Proof of Income
This one establishes whether you are capable of repaying the loan amount or not. For both unsecured loans like a personal loan and secured loans like a car loan, you have to submit the following documents:
For Employed Applicants:
- Pan Card
- Recent salary slip
- Latest Form 16
For Self-Employed Applicants
- Pan Card (For Individuals as well as Firms)
- Latest Income Tax Returns, recent balance sheet with Profit and Loss A/C
- Partnership Deed / Sole Proprietorship Declaration
- Proof of Age
Few lenders don’t provide loans for senior applicants as they aren’t sure of their repayment capacity. This is why you have to submit proof of your age when availing a loan. You can submit any one of the Government issued documents that have your birth date on it such as:
- Valid Passport
- Aadhar Card
- Driving License and others
Document verification is one of the major time-consuming processes when you apply for any loan. By preparing it beforehand, you ensure that the loan approval proceeds smoothly without any hiccups. Make sure that you have all the documents listed here and have copies as well as the original ones when applying for a loan in India.