Personal loans are a popular form of debt that may be used to finance purchases, improvements, events, or even emergency gasoline expenditures. Personal loans are advantageous since they are conveniently accessible online through personal loan apps. Lenders, with the assistance of technology, have made these debt instruments easily accessible, and with a turnaround time of only a few minutes! With the prospect of obtaining a personal loan comes a slew of concerns about reputable lenders, the protection of personal information, and cyber security.
Only when the document verification is successful is the loan application process complete. An applicant must present all required paperwork for every form of loan. The significance of documentation varies according to the type of loan. In the event of unsecured loans, such as personal loans, income evidence and a wage slip are given first attention. Property papers, on the other hand, are critical for secured loans such as house loans and loan against property, which many people overlook.
When is it safe to provide documents to the lender?
Now that we are clear on what all documents would be required in order to avail a personal loan, the question arises how to ensure that your documents are safely shared with the lender. Lenders may use multiple platforms to communicate with the borrower, however, you must wisely choose the platform that is bound to be the safest and leave no room for breach.
Here’s what you need to know while being decisive of the platform you choose
If a lender demands for the documents via email, it is certainly a safe medium to share your documents. You must just be sure that the email address provided by the lender is registered in the name of the entity. Thus, you must be careful of the email domain whilst sharing your documents.
- Personal Loan App
The lenders often design personal loan apps in a manner that a borrower can complete the entire personal loan process online, thus, making provisions to upload the documents on the app. If the lender you choose is authorized, it is certainly safe to upload all the documents on the personal loan app. Likewise, it is also safe if you choose to apply for a personal loan by visiting the lender’s website.
- Message or Phone
If someone approaches you via a messaging platform like WhatsApp and encourages you to share the documents via messages, you must restrain from doing so. Message or phone is the least preferable option while sharing sensitive documents owing to the unknown identity of the sender. However, lenders who are registered on a particular platform officially, may develop easy customer journeys on a messaging platform like Whatsapp for customer convenience. Thus, even if interacting on such a platform, one must only interact with an account’s official number.
Most lenders abide by a Privacy and security policy to ensure data security measures are taken care of, however, it is always wise to take the necessary precautions at your end.
Why would a lender request specific documents?
Processing a personal loan application undoubtedly necessitates the borrower’s personal information and papers, without which a lender cannot assess the risk of giving a personal loan to the applicant. Documents required may differ from borrower to borrower and lender to loan. However, there are a handful that are unquestionably necessary by any lender in order to finalise a loan application. The income at your disposal will help the lender decide what amount of loan can be extended to you and for what tenure. In a few cases, the lender may ask for credit card statements in order to figure out your expenses and how you service these debt instruments.
The following are the documents that most lenders will need, as well as the reasons why they are necessary –
1. Identity Documents
Address proof, a PAN card, and an Aadhar card are among the papers required. These are required to ascertain who the borrower is and where he lives, as well as to verify the borrower’s entire identification. These documents are also known as KYC paperwork, which stand for Know Your Customer.
2. Proof of Income
The lender may request the most recent wage slip(s) to establish that you are getting a consistent and consistent income each month. If you have recently changed jobs, the lender may also request your old employer’s income stubs. This will also assist the lender in determining your eligibility for a personal loan.
If you are a business owner or self-employed professional, you will not have wage stubs to substantiate your income. In such cases, the lender will request an ITR to determine your typical monthly income.
3. Bank Statements
When you apply for a personal loan, the lender will ask for your last 3-6 months’ bank statements. The lender will like to understand your cash flows and financial status using your bank statements. It also helps to determine whether you have any outstanding debts and what your monthly payments are for them, which is generally referred to as assessing your debt-to-income ratio.
How can you be sure your documents are in good hands?
1. Credibility of Lender
Regardless of the steps you take, concerns about the security of data and documents may persist. As a result, here’s what you can do on your end to verify that the papers are in good hands:
Before applying for a personal loan with a specific lender, make sure that the lender is legitimate and registered with the appropriate regulatory authorities. It is also a good idea to evaluate the lender’s internet presence to ensure the lender’s legitimacy. Websites, app store descriptions, social media profiles, reviews, and so on are all venues that may help you assess if the lender is real and trustworthy or not.
2. Mode of Communication
Always use a secure mode of contact with the lender, such as email, when transferring papers and personal information. To be absolutely sure and safe, password encrypt your papers so that the lender may contact you for the same. This manner, a channel of communication may be established, and you can be certain that your materials are not being exploited.
3. Safe Website and Lending App
Before applying for a personal loan, you should properly review the lender’s website. A legitimate lender will undoubtedly have included the Terms of Service, Privacy Policy, and Security Policy. Before providing any data on these networks, you must confirm that you have read these rules as part of cautious borrowing. You may proceed with supplying your information if you are confident in the legitimacy of the website and loan app.