Financial institutions offer salaried and self-employed individuals to avail of a loan without documents—also referred to as paperless loan, or loans with minimal paperworks—to help applicants meet their financial obligations.
Such loans are provided by traditional banks and money lending apps in a form of personal loan subject to their existing relationship with the lending institution as well as history of past repayment of debts, or credit worthiness.
Forbes Advisor India has put together a guide to avail of a loan without document, its eligibility, benefits as well as alternatives offered by lending institutions.
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Aditya Birla Personal Loan
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Features
Minimum Documentation, Easy Online Application and Low Interest Rates
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What does Loan Without Documents Mean?
The idea of a paperless loan is to simplify the process of submission and verification of documents as proof of identity, address, and income. For existing customers, lending institutions will already have supporting documents for KYC (Know Your Customer), which is mandatory as per the Reserve Bank of India (RBI), in order to process such a loan.
So when a crisis strikes, or at times of financial emergencies, existing customers can request for an instant loan from banks with whom they have a savings account, or money lending apps. Such loans are generally processed via mobile application or online banking—hence, called a paperless loan.
Some financial institutions also use the term, loan without document, interchangeably with “loan with minimal paperworks”—such as Aadhaar card loans. Nevertheless, the idea is to simplify the lending process, or minimize the documents required to obtain a loan.
That said, lending institutions will require new customers to go through the KYC procedure by uploading pictures of relevant documents online, or even sit for a quick video call. This will also require submission or information like contact details, current residential address, bank account number, salary or bank statement, etc., on the application form online.
Know Your Eligibility for a Loan Without Document
A loan without document is a type of personal loan offered by lending institutions. The process of assessing the eligibility criteria of a borrower is similar to any other retail loans on the basis of which the loan amount, tenure, as well as interest rates are fixed. The difference is that lenders will already have KYC documents, or income proof, to assess eligibility and repayment capacity for existing customers.
Here’s how individuals can assess their creditworthiness.
Build Your Relationship With the Lender
Ideally, lending institutions with whom applicants have a savings or salary account, fixed deposits, or have taken loans in the past, are the ones who will lend an instant loan without submitting a document—be it traditional banks or money lending apps. Once an applicant submits a formal loan application online, lenders will assess your eligibility and determine your creditworthiness.
Your Employment History and Employer Credibility
In the process of determining applicants’ loan eligibility, lenders check your employment history, your job stability, etc. For instance, an employee working in a government sector will have a higher chance of availing an instant loan than other applicants. Even if an applicant is working in the private sector, the lender could look up your employer’s history of providing stable career options, which can be a factor to instantly get a loan.
Your Credit Score and Repayment History
Quite a crucial factor. Lenders mandatorily run a cibil check on your credit score, and individuals with score of 750 and above have higher chances of getting an instant loan. One’s credit score is also crucial to avail of a low rate of interest on their principal loan amout. Timely payment of equated monthly installments (EMIs) of past loans are duly noted by lenders, and any deterrent on it can have a great impact on getting a loan.
Do You Have a Stable Income?
Remember, financial institutions will run a credit check before sanctioning a loan. This also includes declarations of your income. During the process of applying for a paperless loan, lenders will ask your monthly income to be mentioned in the application form, and you may be required to submit relevant proof (screenshot of a salary slip or bank statement), which is also crucial to determine the maximum loan amount an applicant gets.
Relevant: Best Instant Personal Loan Apps In India 2023
Features of Instant Loans With Minimal Paperworks
Personal loans are taken for fulfilling any financial needs, and the amount is credited directly to the borrower’s account. Here’s what borrowers need to know before applying for an instant loan without documents.
Applicants
Salaried, self-employed, pensioners of Indian nationals.
Age
21 to 68 years.
Cibil Score Requirement
Important. 720 to 750, or above.
Income requirement
INR 10,000 to INR 15,000, or above per month.
Loan Amount
The maximum amount an applicant gets is fixed as per borrower’s credit worthiness, income, credit score, or lender’s policy.
Interest Rate
Here’s the latest rate of interest charged by major banks on personal loans.
Repayment Tenure
Three to 36 months.
Processing Fee
Applicable. The amount is subject to the lender’s policy.
Down Payment
Not applicable.
Prepayment Fee
Applicable as per lender’s policy.
Collateral/Security
Not applicable (NA).
Approval
Such loans are generally processed instantly by money lending apps, or declined instantly. However, banks may take a day or even a week, depending on your relationship over and above assessment of eligibility, income, credit checks, etc.
Disbursal
The loan amount will be instantly credited to an applicant’s bank account as per details submitted during the loan application online.
Instant Loan Without Document Alternatives
Pre-approved personal loan offers
Most lending institutions also run a pre-approved personal loan scheme, with documentation process or eligibility process for sanctioning the loan already carried out in the past so that customers can avail of instant loans without any hassle at times of financial needs.
Personal loan Top-up loan offers from your lender
A personal loan top-up allows borrowers to apply for additional loans over and above their existing loans. The process of documentation is usually eliminated on top-up facilities, and comes with a collateral-free option.
Featured Partners
1
Aditya Birla Personal Loan
Processing Fee starting
2% + GST
Features
Minimum Documentation, Easy Online Application and Low Interest Rates
Bottom Line
“A loan without documents”, “paperless loan”, or “loan with minimal paperworks” are terms used interchangeably by lending institutions to spread an idea: simplification of the process of submission and verification of documents as proof of identity, address, and income for existing customers. As many may think, a loan without documents is not similar to loans taken from a friend over a phone call via verbal agreement.
While financial institutions have eliminated the documentation process for their existing customers for obtaining such loans due to their existing relationship, new customers will have to go through the KYC process. In case of the latter, the documentation process has been simplified via minimal paperworks and ease of submission of information digitally—hence, a paperless loan as such loans can be obtained without visiting the lender’s office.
Frequently Asked Questions (FAQs)
Does loan without documents mean that I don’t have to submit any documentation proof?
If you are an existing customer of the lender, with whom you have a savings or salary account, fixed deposits, or have taken loans in the past, you may not be required to submit documents. However, you may be required to submit relevant information via an application form online, as mentioned above.
How much time will it take for lenders to sanction my paperless loan?
Since the process of loan application, submission, and verification are done digitally, such loans are generally processed instantly. Banks may, however, may take a day or even a week, depending on your relationship over and above assessment of eligibility, income, credit checks, etc.
What is the cibil score requirement for paperless loans?
Important. Individuals with a cibil score of 720 to 750, or above have a higher chance of obtaining loans without documents.
What is the maximum amount that I can avail from a paperless loan?
The maximum amount an applicant gets is fixed as per borrower’s credit worthiness, income, credit score, or lender’s policy.
I am a new customer with the lender, do I have to submit relevant documents?
While financial institutions have eliminated the documentation process for their existing customers for obtaining such loans due to their existing relationship, new customers will have to go through the KYC process. In the case of the latter, the documentation process has been simplified via minimal paperworks and ease of submission of information digitally.
