A personal loan is the best option to deal with financial crunch and the availability of such loans is not just restricted to salaried professionals. Both salaried and non-salaried professionals can avail personal loans as long as they are meeting the eligibility criteria set by the lenders, most of the time slightly different from the latter.
In fact, personal loans have become a go-to option for both types of borrowers in recent times. There are few banks and non-Banking Financial Institutions (NBFCs) who offer personal loans to non-salaried individuals who maintain a good CIBIL score and have the required and relevant documents. However, options for such loans may seem comparatively limited but that is not always the case.
Here are some factors that non-salaried professionals need to consider before applying for a personal loan.
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How to Apply Personal Loan for Non-Salaried Person?
You have all the options available to avail personal loan. You can simply apply through online by filling an application form or through the offline method. The different process through which you can fill the application for loan are –
Online Application – You simply need to visit the website of the bank and by providing your personal information can easily apply for the loan. Apart from this, you can also apply through Internet Banking with the help of using your login ID and credentials.
Visit the Branch – Pay a visit to the bank branch with all the required documents and submit the same to get the loan.
Over the Phone – Get in touch with the customer care executives to get the loan.
Need to Provide Relevant and Sufficient Proof of Income and Business Continuity
Self – employed professionals should provide below documents. These documents should be authentic and legal.
- The duly signed application form
- Passport size photograph
- Proof of Id – Passport/Voter Id/PAN Card
- Proof of age – Birth certificate/Passport
- Proof of residence – Passport/Utility Bill/Allotment letter
- Proof of income – Last 3 years Income Tax Returns (ITR), Audited and CA certified financials for the latest 2 years, which includes P&L, Balance Sheet, audit reports, etc.
- Balance sheets – Last 3 months Bank statement/Last 6 months Bank Passbook
The above documents also serve as the Business Continuity proof. Lenders have a minimal annual business turnover criterion, which varies from bank to bank. Apart from this, Lenders prefer businesses that have been running for a minimum of 3 years and consistently running in profits.
Lenders take into consideration certain things to assess the creditworthiness of the non-salaried professionals before sanctioning the loan amount. Eligibility criteria varies from bank to bank and below is the general eligibility criteria –
- The applicant should be Resident of India.
- The applicant should have the minimum age of 24 years at the time of application and the maximum of 65 years at the time of loan maturity.
- The minimum turnover or profit of the applicant should be as per the lender’s requirements.
- The minimum work experience in the current business for at least 3 years.
- The minimum Annual turnover should be INR 1 Lakh
For most of the lenders, these are the must documents that are must be submitted for the approval of the personal loan. Do note that lenders may request additional documents on a case to case basis, like business partnership proofs, etc. You must keep your documents ready while applying for a personal loan.
Work on Your Credit Score
Having a good and healthy credit score usually (750 and above) will automatically increase the approval chances of a loan. It gives the lender a sense of confidence in your repayment capacity even if you are not a salaried person. If you don’t have a good credit score, start working towards one before applying for a personal loan. For instance, you can build a good credit by paying your credit card bills on time.
Once you are successful in getting your lender convinced about you repayment capability and the basic eligibility criteria, getting a loan will be a smooth ride.
Interest Rate and Other Charges
Before applying for a personal loan, compare interest rates and choose a product that suits your requirement. It is a high interest rate loan product as compared to others. And usually it varies from 8.80% - 26.00%, depending upon your profile and policies/scheme you opt for. So you should be careful before availing one for yourself. You should also check other charges associated with the loan like GST (Goods & Services Tax), processing fee, prepayment charges, foreclosure charges, late payment or EMI bounces charges.
It is very important to evaluate every aspect before applying. You should always thoroughly check all the options available then only apply for personal loan of the lender offering you the best deal. Always choose the product that suits your requirements.