Personal Loan Verification Process- What Must You Know?

Last Updated: 14 Oct 2024

Personal Loans have become highly popular in India as a preferred financial choice. Whether you have aspirations of a dream wedding, international travel, pursuing higher studies, renovating your house, or facing a medical emergency, Personal Loans serve as a versatile solution for all your financial needs.

The key driving force behind the widespread popularity of these loans lies in their unsecured nature. Unlike secured loans, Personal Loans do not necessitate the borrower to offer any collateral as a guarantee for the loan. This aspect makes lenders exercise extra caution during the verification process, as they lack the safety net of assets in case of loan default. Read on to learn more about the personal loan verification process.

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4-Step Verification Process for Personal Loans

In India, Personal loans are highly in demand as individuals seek them for diverse purposes such as weddings, home renovations, festive expenses, or consolidating existing debts. However, it’s important to note that personal loans are categorized as unsecured loans, leading to a rigorous document verification process. The verification process can vary significantly from one bank to another. Let’s delve into the typical personal loan verification process from the bank’s perspective:

Loan Application

To obtain a personal loan, the borrower must initiate the application process with the lender. Nowadays, numerous lenders offer the convenience of applying online. Once the loan application form is submitted, the borrower will receive a unique application ID. This ID can be utilized to monitor the progress and status of the process for personal loan.

Document Collection

Upon receiving a loan application, whether through online channels or offline means, the bank arranges for a representative to meet the borrower in person. The purpose of this meeting is to gather all the essential documents necessary for availing a personal loan. Typically, these documents include address proof, identity proof, income proof, a duly filled loan application form, and passport-size photographs. These documents are crucial for the bank’s smooth processing of the personal loan verification.

Verification Of Documents

Upon receiving the necessary documents, the lender commences the verification process for personal loan. A representative from the field investigation team is assigned to visit the borrower’s residence and confirm the accuracy of the provided address. Additionally, they may visit the applicant’s workplace to validate their employment status.

The Personal loan verification process is conducted through online portals for documents such as PAN cards, Aadhaar cards, or passports. Once the documents are verified, the investigation team compiles and submits their reports to the loan officer responsible for personal loan accounts.

If the verification process proves successful, the lender processes the loan for disbursement.

Sanctioning Of Personal Loan Amount

Typically, this marks the final phase of the personal loan verification process. Once the personal loan officer receives a favourable report from the verification team, the ultimate loan agreement is prepared. During this stage, the lender and the borrower agree on the interest rate, loan repayment tenure, additional fees, charges, and the EMI amount.

Before signing the loan agreement, the customer must thoroughly review the terms and conditions. Once the customer signs the agreement, the lender promptly transfers the approved personal loan amount to the customer’s bank account within one business day.

Every individual must treat the verification process for personal loan with utmost seriousness, as this phase serves as the primary screening for applications. A single misstep could result in missing out on the desired loan amount. Hence, it is essential to organize all the required documents, address any potential issues diligently, and finalize the deal with the lender.

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Conclusion

Personal loan verification process does not require borrowers to provide any collateral to the lender. As a result, lenders carefully scrutinize the loan applications, verifying the CIBIL score and ensuring all necessary documentation is provided. It is crucial for borrowers to have all the paperwork in order before applying for a personal loan. Thoroughly reading and understanding the loan agreement is essential to avoid any unpleasant surprises in the future.

To avoid the growing number of loan scams and ensure smooth and timely approval, borrowers should opt for reputable lenders. Some prominent non-banking finance companies now offer personal loans through a fully online process, completing the application within minutes and disbursing the loan after meticulously verifying all submitted documents, usually within a couple of days.