Shopping around to get the best deal when looking for a personal loan can be stressful. However, the next step isn’t simple either. Many people might think that all you need to do is fill out the loan application form. But the fact is that lenders want a number of crucial documents from the borrowers before approving the loan. These documents will give a clear picture of your financial status for the lenders to decide whether it’s safe to lend you money. So, before filling out the application form, it is recommended that you know the document checklist that most lenders want. This will make your personal loan application process smooth and quick. Also, it will increase your chance of getting the loan.
If you provide incomplete documentation, then the lenders might not approve your loan application. Preparing the necessary documents beforehand will give you the time to look at the gaps you may have. As a result, you can take the necessary steps to complete the document checklist before going to the lenders.
Loan Application Checklist
Proper documentation is the main factor in a successful personal loan application process. By looking at the documents, the lenders can be certain that you are really in need of money, thus a genuine customer. The lenders will also know whether you are eligible for the loan and can repay the money on time. Here is a list of the documents the lenders ask for during the personal loan application process.
✅ Application Form
You must submit a completed application form for the loan. You are likely to fill out your name, contact information, date of birth, social security number, and address history. You will be asked to put in your loan amount and the purpose of taking the loan. There will also be questions about your financial details, such as income and debts.
✅ Personal Identification Documents
You will then be asked for your proof of identity. Loan application fraud is very common nowadays. You must show proper documentation to prove that you are a genuine borrower. Your identification document can show your name, date of birth, address, and resident status, that is, whether you are a permanent resident or residing in the country on a particular visa. Valid IDs will include a passport, a social security card, a driver’s license, a certificate of citizenship, and a birth certificate.
✅ Proof Of Address
Lenders will have to verify your present address. For this, you need a proof of address that can be your utility bill, credit card bill, rental agreement, or any other bill and payment notices. If you have shifted elsewhere recently, you need to provide the previous address as well.
✅ Credit Report
It is recommended that you obtain your credit report yourself and submit it to the lender. Once you pull out the credit report yourself, you can review it and see if there is any inaccurate information or if there are areas of improvement to increase your chance of getting the loan. Instead, if you allow the lenders to pull your credit report, you won’t get the opportunity to fix anything in the report.
✅ Income Validation
You must present documents related to your employment to demonstrate your employment history and earning capacity. The lenders must be convinced that you can manage your monthly installments comfortably without causing any strain on your financial life. You may provide an appointment letter, salary slips of the past three years, a bank statement showing your salary, and other documents. If you are doing business, then you must give the business registration certificate, trade license, income statement and balance sheet of the past two years, income tax returns, and related papers.
✅ Monthly Expenses
To be more confident in lending you money, many lenders will ask about your monthly expenses. Therefore, you may need to present proof of these expenses. You must submit documents showing your mortgage, rent, utility expenses, car loan, credit card, insurance, student loan payment, past few years’ bank statements, and others. By calculating your expenses, the lenders can determine if you have sufficient money left to make a new loan payment.
✅ Purpose Of The Loan
If you plan to start a new business using the loan amount, then you must give a business plan. If the loan is for buying a property or a car, then show the sales deed or receipt. For educational purposes, you must provide the appointment letter along with the tuition fee structure. In case of medical bills, you must present the billing invoices.
✅ Documents For Collateral
A secured loan can give you the best terms. It’s a win-win situation from both the perspective of a borrower and a lender, as it also minimizes the risk of giving a loan. You need to provide documentation to prove the value of your collateral. If you want to keep your real estate property as collateral, then your name on the asset must appear on public records.
You may apply with a cosigner to improve your chances of getting a personal loan. In such a case, you must submit all the above documents of your cosigner as well.
Conclusion
Your paperwork will reveal your financial picture and tell the lender whether you are capable of repaying the loan or not. Collecting these documents beforehand can save you a lot of time. Make sure you don’t miss anything to delay the personal loan application process. When you go to the lender with complete documentation, it will show how serious you are about getting the loan. Thus, it will create a positive impression and increase the chance of a loan approval.
