No matter how well settled we are in our careers and financially stable, an emergency can present itself at any time, especially during hours such as these. When in an emergency, getting a traditional loan can be a challenging process mainly due to the fact that they have long application procedures and often take 1 to 2 business weeks to get processed and the final loan amount actually arriving at your account.
If you are a salaried employee in India, getting a personal loan would be ideal in such circumstances; however, one of the key requirements for most lenders is to present your latest salary slip. If you don’t have one present with you, the process can be challenging, but luckily there is a way around it, and in today’s article, we will discuss exactly that.
How to Get a Personal Loan Without a Salary Slip?
In order to get a personal loan in India without a salary slip, one of the first aspects you should take into account is understanding the meaning of one.
A personal loan, in simple terms, is a financial lending instrument which allows borrowers to borrow a certain amount of funds, usually in the range of ₹10,000 to ₹500,000, with minimal documentation. One of the key highlights of a personal loan is the fact that they get approved in a matter of hours since you do not need to present any collateral for the loan.
How Much Loan Can You Get?
Personal loans in India vary between ₹10,000 to ₹500,000; however, the exact loan amount you will be approved for as a salaried employee can depend on a number of factors. A great way to estimate the loan amount you would be eligible for, is to do a reverse calculation; let us explain.
For instance, if you are a salaried employee with a monthly income of ₹25,000, then the loan amount you are approved for should have an EMI below ₹12,500. Lenders across the country follow a rule of thumb which dictates that the total EMI you pay should not exceed 50% of your monthly income, such that the chances of default are less. Along with this, most banks and NBFCs typically extend a tenure between 12 months to 60 months; thus, if we do the calculation, the loan amount you would be approved for is ₹150,000. This calculation is only an estimate and has taken into consideration that the tenure is of 12 months. The interest rate has not been considered.
Along with your monthly income, there are several other factors the lender will consider before approving your application, the most significant of which are as shared below.
Credit Score
One of the first and most important factors any lender would check is your credit score. Essentially your credit score, which is sometimes referred to as credit history, is an account of all the loans you have availed over the past 5 years. There are two main credit rating agencies in India, CIBIL and Experian, and both of them essentially take into consideration the following factors to calculate your creditworthiness.
- The number of loans you have taken in the past
- The total amount of credit you have utilized in the past
- The total number of timely payments you have made
- The total number of late payments you have made
Taking all these factors into account, the credit rating agency will assign you a score of 900, and you need to have a minimum of 750 to avail a loan. In this regard, it is worth noting that the higher the credit score you have, the higher will be the loan amount you are approved for.
Along with your credit score, there are several other factors the lender will consider, such as,
- Age: You should be between the ages of 21 and 60 years in order to apply for a personal loan and consequently be approved for it.
- Employment: You should be employed as a salaried individual at either a public or a private sector company.
- Location: Although not necessary, some lenders tend to approve higher loan amounts if you are currently residing in a Tier-I city such as Mumbai, Bangalore, Kolkata, Hyderabad, Chennai, etc.
- Experience: Most lenders require you to have a job experience of minimum of 2 years to approve your application.
Tips to Get Approved
If you are a self-employed individual or you do not have the salary slip present with you, the following tips will help you get your loan application approved.
- Documents
In case you are missing your salary slip, you can share your latest ITR reports for at least the previous 2 years to display as income proof. Along with this, you can also submit your bank statements of upto 6 months as income proof.
2. Co-borrower
You can increase the chances of approval of your loan application by many folds if you can apply with a co-borrower. This essentially means that you will be filing the loan application along with another individual, and both of you will be equally responsible for repaying the loan amount on time. Along with this, before approving the application, the lender will check both the applicant’s income history, credit score, and employment type to minimize the chances of a default.
3. Secured Loan
Another great way to increase your chances of approval is to apply for a secured collateral-backed loan from the lender. In this case, you will be required to pledge a high-value asset such as FD, gold, etc., in order to get the loan. One of the most interesting aspects of a secured loan in India is the fact that they arrive with a higher chance of approval and also lower interest rates since the risk for the lender in such a scenario is less.
Conclusion:
Getting a personal loan, especially in an emergency situation, can prove to be a lifesaver. Now that you know how to apply for a personal loan without a salary slip, go ahead and choose a lender today. All the best.
