How Do Banks Process Personal Loan Applications?
Is it easy to get a personal loan? Well, yes and no.
On one hand, there is less paperwork, since the bank does not have to verify any assets as in the case of home loans. On the other hand, there are stringent income criteria to qualify for personal loans. But once you make the grade it takes only about three days for you to get a personal loan and a lot less time than a home or car loan.
So, here goes a step-by-step break-up of the personal loan application process:
Step 1: Inquiry with a Financier
The first step is to get in touch with a lender. How do you know whom you should approach? You need to get in touch with as many lenders as possible and get them to make loan offers to you. Then negotiate with them to get the best interest rate. Check if there are any special offers.
After you have got all the banks to make their offers to you, select your lender based on the information you have in front of you.
Step 2: Documents Collection
After you finalize your lender, the lender’s direct selling agent will visit you and collect documents supporting proof of income, residence proof, and identity. You may be required to produce copies of IT returns, salary slips, bank statements, ration card, passport, driving license, and other relevant documents. These requirements vary from lender to lender.
Step 3: Field Investigation
After submitting the documents, a field investigator will visit your home to double check the facts provided in the documents, such as your place of residence, tenure at work place and so on. It is essential that you are present during this visit; otherwise the investigator could report that the facts you provided do not actually add up, thus forcing the lender to reject your loan application.
Step 4: Loan Approved
Once the lender is satisfied with the veracity of your documents, the loan is approved. The lender then disburses the amount through checks or demand drafts (DD).