A personal loan is a go to debt instrument that comes handy while planning purchases, upgrades, events or even fuel expenses that arise out of emergencies. Personal loans are favourable as they are easily available online on personal loan apps. Lenders, with the help of technology, have made these debt instruments easy to avail and surely with a turn around time of a few minutes!
With the thought of availing a personal loan come a plethora of questions around authentic lenders, safety of personal information and cyber security. To help you understand what lenders need in order to process an Instant personal loan application and how safe it is to provide certain data and documents to your lender; we have formulated this piece to impart the necessary information regarding the same.
Why does a lender ask for certain documents?
Processing a personal loan application certainly requires personal information and documents of the borrower, without which a lender is unable to gauge the risk involved in extending a personal loan to the said applicant. Documents demanded may vary from borrower to borrower as well as lender to lender. However, there are a few common ones that are surely required by any lender to be able to process a loan application.
Listed below are the documents most lenders will ask for and the associated reasons as to why those are required –
Identity related documents
These documents include Address proof, PAN Card and Aadhar card. These are essential in order to determine who the borrower is and where he resides and to verify the complete identity of the borrower. These documents are also known as KYC documents i’e., Know your Customer, as precisely the name suggests.
On applying for a personal loan, the lender would demand for your 3-6 months bank statements. With the help of your bank statements, the lender would want to understand your cash flows and financial position. Also, it helps understand if you have any existing loans and what is the cash outgo towards it, often known as determining the Debt to income ratio. 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 lender may demand the latest salary slip(s) in order to ensure that you are receiving a fixed and uninterrupted income every month. In case you have had a recent job change, the lender may also ask you for the salary slips of the previous employer. This will also help the lender to determine your eligibility for a personal loan.
If you are a business owner or a self employed professional, you wouldn’t have salary slips to prove your income. At such times, the lender would ask for an ITR in order to assess your average monthly income. Also, if you have any additional source of income, like rent received or income arising out of some side business, an ITR will help get a clearer picture about your income.
Lenders typically require these documents to establish the creditworthiness of a borrower. So if you are really in dire need of a personal loan you must ensure that you provide the lender with sufficient documents and certainly authentic ones to fast track the personal loan process.
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. For example, email@example.com is not a registered email id whereas firstname.lastname@example.org is an authentic company email Id. 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.
How to ensure your documents are in safe hands?
Regardless of the precautions you take, the apprehension regarding the safety of data and documents may prevail. Thus, here’s what you can do at your end to ensure that the documents are in safe hands –
1. Credibility of Lender
Before you apply for a personal loan with a particular lender, you must ensure that you check whether the lender you have approached is genuine and is registered with the necessary regulatory authorities. Also, it is safe to check the online presence of the lender to be sure about the credibility of the lender. Websites, App store descriptions, social media accounts, Reviews etc, are various platforms that will help you determine whether the lender is authentic and trustworthy or otherwise.
2. Medium of communication
Always choose a safe medium of communication with the lender especially while sharing documents and personal data i.e, Email. To be doubly sure and safe, you can password protect your documents, so that the lender can contact you for the same. This way a line of communication may be initiated and also you can be very sure that your documents are not misused.
3. Secure Website and Lending App
Keeping in mind the exchange of sensitive information of a borrower, LoanTap takes the necessary steps to ensure data security measures are adopted and abided by. We follow an end to end encrypted application process with the help of a robust technology. Likewise, LoanTap’s Personal loan app is a safe platform to upload documents and we ensure that a borrower’s data is secure with us. We believe in providing an easy, convenient and transparent personal loan application process and strive to deliver a smooth customer experience across the journey with us.