Personal Loan Disbursement Process

Understanding of the personal loan disbursement process can help you in applying for a personal loan more easily. You will be able to get a personal loan more quickly if you have this understanding.

What Is A Personal Loan?

A personal loan refers to a kind of loan that can be obtained by individuals from any financial institution, including a bank or credit union, for fulfilling their financial needs. As compared to specific loans such as automobile loans or mortgage loans, personal loans can be made to use for a variety of purposes, including funding for house renovations, wedding expenses, and payment of medical bills, among many more.

Personal loans are typically unsecured loans that don’t involve any requirement of collateral. The lender accesses the borrower’s creditworthiness along with other relevant factors such as their debt-to-income ratio, employment history, and income. The requirements, as well as the terms and conditions, tend to vary from one lender to the other.

With the approval of the loan, a lumpsum amount is received by the borrower, who in turn agrees to repay the entire amount over a fixed period, especially through monthly installments. The personal loan interest rate may remain fixed or vary per the loan agreement.

Requirements To Apply For A Personal Loan:

Although the requirements to apply for a personal loan significantly varies from one lender to another, below are listed some common criteria that are specifically considered by lenders during the evaluation of personal loan applications.

• The personal loan applicant must be above 21 years of age.
• A good credit score is essential for increasing the chance of loan approval.
• Proof of a stable source of income.
• One must be a citizen of the country where one intends to apply for a personal loan.
• A lower debt-to-income ratio offers a higher chance of approval of the personal loan application.
• Personal documents are also significant for completing the application process for a personal loan, below are some important documents required:

1. Identity Proof
2. Proof of income
3. Bank statements
4. Proof of address
5. Income Tax Returns

Approval Of The Loan:

Once the loan application is successfully submitted along with the required documents, the approval process will begin. This may take three to four working days, although the time taken for approval solely depends on the lender. In case of incomplete paperwork, the approval procedure might take longer than usual. Thus it is advised to review all the documents carefully before final submission. Your loan will be approved quicker if you are an existing customer of the financial institution or the lender.

Disbursement Of the Loan:

Once the lender approves the loan, a sanction letter will be sent to you, including all the relevant information, including the total loan amount, rate of interest, and repayment methods. On approval, the disbursement of the amount typically takes a day or two. The amount may be directly transferred to your given bank account, or you may receive a cheque at home.

Conclusion

Therefore it is clear that the entire process is hassle-free. All that you need to ensure is correct information and documents. Personal loans have gained the most popularity due to their flexibility and convenience. The best option to opt for a personal loan is from a financial institution with whom you have a bank account.