When you are applying for a personal loan, first and foremost you fill out an application, you attach all the necessary documents and then you give it to the banks or NBFC (Non-Banking Financial Companies). What comes after that is a very crucial part of the personal loan approval process and that is verification.
The verification process of a personal loan includes substantiating of:
1. Eligibility criteria,
2. Documents attached to the application,
3. Repayment capacity, and
4. CIBIL/Credit score.
A personal loan is an unsecured type of loan provided by the financial institution for helping individuals with their immediate personal requirements. The process of applying and sanctioning may take up a few days. The major portion of the processing time is dedicated to verification.
The banks or NBFC (Non-Banking Financial Companies) assesses your eligibility first. The basic requirements of a lender for you to be eligible are that you must be a minimum of 21 years of age with a stable source of income. There can be additional prerequisites of lender which they will explain to you before you apply for the personal loan.
Then the lenders verify the documents you have attached to the application. The documents required are your identity proof (driving license or adhar card), address proof (ration card or passport), and income proof (salary slip or bank statement). Verifying your documents consumes a lot of time from the lender. This is why lenders may charge a processing fee. It is advisable to you that the documents you attach should be up-to-date, accurate, and genuine to make this process swift.
After the eligibility and documents are verified, the lender checks for your repayment capacity. The amount of personal loan you will get is dependent on your repayment capacity. After this, the lender considers the CIBIL/credit score. The ideal score is 750 and above. If your credit score is good then the lender will not hesitate while granting you the loan and will even levy a low personal loan interest rate. In case your credit score is lower than the required score, the lender will ask you to pay a high personal loan interest rate. In this case, you can involve a co-applicant or provide collateral to bring the personal loan interest rate down. SBI personal loan policy requires a minimum credit score of 650 and above with flexible terms of the loan.
This process is standard for all the applicants with minor variations depending on the bank or NBFC you are taking a personal loan from. You must provide the lender with all the necessary information to get a personal loan as soon as possible.
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