Personal Loan Documents Required in India: Eligibility & Process

A personal loan is generally an unsecured loan that you can get almost instantly nowadays. 

It’s a multi purpose loan that you can take for a range of uses from emergency household expenses, to covering some travel expenses. These loans are largely paperless, but this article should help you with the list of documents required for personal loans, should you ever be asked for it.

Personal loan eligibility checks

Before you actually go ahead and read about the list of documents required for applying for a personal loan, take a moment to do a self-check on your eligibility and need for a personal loan.

A. Establish your personal loan requirements

Different personal loans come with different process requirements, limits, and eligibility criteria. For example, a higher education loan entails a slightly different process as compared to, say, a wedding loan. Similarly, a home renovation loan can get you a higher amount than a consumer durables loan. You get the idea.

So, the first step is to define what you’ll use this loan amount for.

B. Check your credit score

A personal loan in unsecured - meaning there’s no collateral taken from you to disburse the loan. That’s why your credit score has a key part to play in determining your trustworthiness. This in turn dictates the loan terms, interest rate, and loan amount.

C. Know the personal loan eligibility criteria

It is equally important to know if you qualify for the loan. The factors affecting loan eligibility include:

D. Monthly Income

The higher the income, the better your repayment ability, hence, higher loan amounts

E. Outstanding Credit

Existing loans mean your expenses are high; hence, you may receive a limited loan amount. But this can be offset if your income-to-expenses ratio is found favourable.

Credit History 
A credit score of 750 gets you attractive rates, higher amounts, and better repayment terms

F. Location

Metro cities tend to have a higher loan limit

G. Employment History

Regularly employed people tend to get higher loan amounts

H. Collateral

A personal loan does not require collateral, but if you’re not a salaried professional, then owning a property in your name can boost your eligibility

While the personal loan criteria can vary among lenders and also as per the type of loan being sought, in general, the following criteria are preferred:

• Indian nationals
• People between 21 to 65 years
• A credit score of 750 and above
• A minimum monthly income of ₹25K (can be lower for tier-2 and 3 cities)
• Gainfully employed in the private or public sector (MNCs and PSUs included) for at least 2 years, OR, Self-employed professionals with documents to prove income source

I. Compare rates and calculate your EMI

The interest rate directly impacts your EMIs. A higher interest rate could mean higher EMIs. But not always. The other variables involved are the amount being borrowed and the loan tenure. 

If you are in a financial crunch that limits your repayment ability, then you can choose a longer tenor that is likely to reduce your monthly EMI. On the other hand, if you are expecting some financial gains from elsewhere, then opt for a shorter term (yes, this means higher EMIs), and repay the amount soon which will cost you less overall.

Getting good interest rates on a personal loan is also a key aspect to consider. Make sure you research on this first.

Calculating these EMIs can be rather tedious if done manually. Instead, to select the ideal loan tenor, and to plan your monthly budget optimally, you can use the Fi Money Personal Loan EMI calculator.

If you’re not sure about personal loans in general, consider checking out this article on how personal loans work first.

Tips to Improve Personal Loan Eligibility

As a borrower, one must comply with the lenders' prerequisites for loan approval before sending a loan application. Here are a few Personal Loan tips to amplify the chances of seamlessly securing a loan from your lender.

• Maintain a high credit score

• Improve CIBIL score

• Reduce debt-to-income ratio

• Avoid multiple loan applications

• Opt for a longer tenure

The Essential Documents for Your Personal Loan Application

1. List of KYC documents required for personal loan for a salaried person

• PAN Card (mandatory)
• Aadhaar Card or Passport or Driver’s License or Voter ID
• Form 16 (from employer)
• Employment letter (if joined a company recently with the date of joining clearly mentioned in it)
• Office ID card
• Bank statements (showing salary credits)
• Salary slips of either last 3 months or 6 months

2. List of KYC documents required for personal loan for a self-employed/unemployed person

• Income Proof 
• PAN Card (mandatory)
• Aadhaar Card or Passport or Driver’s License or Voter ID
• Certificate of incorporation or licence of your business
• Lease agreement if operating from a brick-and-mortar office
• Degrees and certificates of qualification for professionals such as lawyers, doctors, etc.
• Form 16 or Income Tax returns (ITR) for the last 2-3 years
• Recent three months’ bank statements (attested by a bank official)

Getting a personal loan online is inherently more convenient as you simply need to upload the soft copies of the relevant documents. 

However, if you have chosen the traditional, offline, way to apply for a loan then it is advisable to take original documents along with you when you visit the branch office of the lender.

3. List of KYC documents required for personal loan for pensioners

• Aadhaar Card
• PAN Card (mandatory)
• Voter ID/Passport or Driving License
• Any address Proof
• Income Proof
• Salary Slips or Bank Account Statements
• Passport-size photographs

4. List of KYC documents required for personal loan for NRI applicants

• Aadhaar Card
• PAN Card (mandatory)
• Voter ID/Passport or Driving License
• Any address Proof
• Income Proof
• Salary Slips or Bank Account Statements
• Employement proof such as an Appointment Letter, job contract, HR’s email ID or official email ID, Labour/ Identity card/CDC (for NRIs working in the Middle East or employed in Merchant Navy)
• Passport-size photographs

While you’re at it, give this article a read on steps to apply for personal loans online.

Final thoughts

Getting a personal loan is usually faster and simpler than other types of loans, given that they’re not secured. On Fi Money, you can avail of personal loans in minutes if you’re pre-approved for one. The loan approval process and disbursal 100% paperless.

Frequently Asked Questions

1. Is collateral required for a personal loan?

A personal loan is an unsecured loan. This means it requires no collateral or security against it. An accurate and complete application with the pertinent documents will suffice.

2. Is a guarantor required for a personal loan?

A credit score of 750 and above is vital for securing a personal loan. If you meet this criterion, then you will not require a guarantor. However, if your score is lower, then some lenders might require you to have a guarantor to reduce their perceived risk. This is entirely up to the lender’s policy and can be checked before applying for the loan.

3. How many cheques are required for a personal loan?

In a secured loan, the lender (bank or the NBFC) asks for the original papers of the collateral being provided (like property or vehicle). Since a personal loan is unsecured, such a situation does not arise. However, to reduce the risk of non-payment, most lenders ask for the applicant's post-dated cheques (PDCs). This can be 3 months or 6 months, depending on the lender’s policy. Do note: that is not a mandatory process across the lending industry, and several companies may not require any cheques at all.

4. What is the minimum salary for a personal loan?

For salaried professionals, most lenders require a minimum salary of Rs. 15,000 or higher, with a preference for those earning at least Rs. 25,000. Self-employed individuals typically need a gross annual income of Rs. 2 lakh or greater to meet lender requirements.

5. Can I get personal loan without salary slip?

Here are some ways to get a personal loan without salary proof:

• Show an alternate source of income (freelancing, side hustle) through ITR, income certificate, etc.
• Maintain a high credit score to demonstrate your creditworthiness and ability to repay.
• Pledge assets as collateral against the loan.
• Apply jointly with a co-applicant to increase your chances of approval.

6. How much EMI do I have to pay for a 2 lakh loan?

To calculate EMI for a personal loan, use the formula:

EMI = P * r * (1 + r)^n / ((1 + r)^n - 1)

Where:

EMI= Equated Monthly Installment
P= Principal loan amount
r= Monthly interest rate
n= Loan tenure in months

Using this formula, the estimated EMI for a 2 lakh loan at 3% processing fee is approximately ₹18,336 per month.

You can also directly use the Fi Money calculator to instantly calculate the EMI for your personal loan.

7. What is the difference between a pre-approved personal loan and a regular personal loan?

A pre-approved personal loan is an instant loan offer from your bank based on your existing financial history. It requires less paperwork and comes with faster approval. On the other hand, regular personal loans need a whole application process in which you submit all documents and wait for bank approval. 

8. Can I get a personal loan with a low CIBIL score?

Getting a personal loan with a low CIBIL score is challenging but possible. Some banks consider scores around 600, but you'll need to prove stable income and your ability to repay. 

9. How long does it take to get a personal loan approved?

The approval process typically takes 2–3 working days, depending on your chosen lender. However, delays may occur if the required documents are not submitted correctly. To avoid any setbacks, carefully review all necessary documents before submitting your application.