How to Get a Personal Loan Without a Salary Slip in India?
In India of 2020, getting a personal loan has become easier than ever before thanks to the numerous lenders who now specialize in this domain. But even so, there are a few criterias every lender checks before approving your personal loan application, and this can range all the way from checking your credit history to asking for your salary slip as an income proof. Generally, it has been observed that lenders tend to prefer salaried professionals largely over self-employed ones, due to the fact that salaried professionals are much less likely to orchestrate a default on their repayment as compared to self-employed.
However, even if you are a salaried employee, in most cases, you will need to share your salary slip with the lender in order to get approved for a personal loan. But this does not mean that without a salary slip, you cannot get a personal loan, while on the contrary, it is quite possible if you just follow the right steps.
If you are planning to get a personal loan in India and you do not have a salary slip present with you, then this article is for you. In today’s article, we will share with you everything you need to know on how you can get a personal loan without a salary slip in India. Let’s get started.
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How to Get a Loan Without a Salary Slip?
In India, whenever you approach a lender for a personal loan, one of the first things the lender does upon receiving your application is gauge your creditworthiness. This essentially means that the lender is trying to understand whether you will be able to pay back your loan on time or not. In this process, there are various steps involved, starting all the way from determining your net income to checking your credit score.
One of the most common ways through which lenders establish your income is by verifying your salary slips. However, if you do not have your salary slip, there are alternate tips you can follow to ensure that you get the loan you deserve. The most significant of them are as mentioned below:
An Alternate Proof of Income
One of the first and most important tips you can follow in order to get approved for a personal loan without a salary slip is to provide proof for an alternate source of income. This tip is mostly applicable to you in case you are working as a freelancer, you primarily transact in cash, you are a contract employee, or you have a business whose revenue tends to vary.
In order to prove that you have an alternate source of income, there are several steps you can follow, for example:
- Share the last 6 months to 12 months of your bank statement (depending on the lender you choose).
- Share your last 3 years of ITR returns
- Produce an income certificate
- Submit your form 16
All these documents are accepted by most lenders in India as alternate proofs of income, thus making it easier for you to get your loan application approved.
Maintain a Good Credit Score
When you approach a lender without a salary slip, you are essentially limiting the avenues through which the lender can check and verify your creditworthiness. In such scenarios, lenders generally give high emphasis on your credit score and credit history.
If you do not know what your credit score is, you can simply understand it as being a numerical value that is assigned to you by credit rating agencies (CIBIL and Experian in India) after taking into consideration four main factors:
- The number of loans you have taken in the past
- The total debt your currently have
- Your past record of paying your EMIs on time
- Any missed payments
Taking all these factors into consideration, the credit rating agency gives you a score on the scale of 900. If you do not have a salary slip, the lender will definitely use your credit score to a high degree as a yardstick to measure your creditworthiness. Thus if you want your personal loan application to get approved quickly, make sure that you have a credit score of above 750, as it indicates to the lender that you have been responsible with your credit in the past.
Apply for a Secured Loan
Most first time borrowers aren’t aware of the fact that there are two main types of loans in the Indian market. The first is unsecured loans and the second is secured loans. Unsecured loans are primarily designed for those, who have a good financial standing in the past, but require a loan at present to meet certain expenses. In unsecured loans, your credit score, income history and other factors are taken into account, while making sure that you do not need to pledge any asset to avail this type of loan.
On the other hand, a secured loan is designed for borrowers who might have had a weak financial standing; however, need a loan now to meet certain expenses. The only key difference between an unsecured loan and a secured loan is the fact that in secured loans, you need to pledge any asset or collateral, while there is no such mandate for unsecured loans.
If you are applying for a personal loan without a salary slip in India and finding it difficult to get your loan application approved, check with your lender if the facility of a secured personal loan is available. If a secured personal loan is available, go ahead and apply for the same and you can pledge any high profile asset like high net worth FDs (Fixed Deposits), shares and stocks, mutual fund portfolios, gold or property.
Apply Loan With a Co-Borrower
One of the best tried and tested methods for securing a loan when you lack a salary slip is to apply with a co-borrower. The reason behind applying with a co-borrower is simple; since you do not have a salary slip, the lender is essentially finding it difficult to assess your loan application. On the other hand, if you apply with a co-borrower and he or she has a salary slip along with a good credit history, the lender can essentially use it to second your application and thus fast track the approval process.
However, you need to keep in mind that while applying with a co-borrower you need to make sure that your co-borrower arrives with a salary slip as well as a good credit score because otherwise your application might get rejected.
Ending Lines: Find a Lender With a Simple Application Process
Last but not least, when you are in the process of securing a personal loan without a salary slip in India, make sure that you arrive at a lender who has simple eligibility criteria. The reason behind this being, with simple eligibility criteria, your entire loan application will become much more smooth and effortless as compared to applying with a lender who has a stringent policy in place.
So go ahead, follow the steps outlined above and secure the loan you deserve.
