Applying for a digital loan? Know eligibility, documents required and interest rates

A personal loan (PL) available at a digital platform or on an app by lenders is known as digital loan. Also called an online personal loan, the loan amount in this case is sanctioned in a lesser time. However, the procedure is complete only when the document verification is successful. Hence, maintaining proper documentation is crucial for a smooth process.

Everyone who is eligible to get a normal personal loan is also eligible for online PL. So, salaried employees working with a private limited company, public sector undertakings, or a self-employed person with a minimum income/turnover criteria are eligible for this loan.

The online personal loan eligibility, however, largely depends on the applicant's credit score or additional data that a person shares with the lender (if the credit score is not available). There are a few cases where additional/alternative information (like age, type of employment, professional experience, etc.) holds a higher ground, which allows online loan providers to go beyond the traditional lending processes.

Having all the necessary paperwork readily available can expedite the loan approval process and prevent unnecessary delays, rejections, or requests for additional documents.

"Well-organized documentation also helps borrowers to provide accurate information, minimizing the risk of errors and ensuring transparency. Ultimately, being diligent with the documentation increases the chances of securing a personal loan with favorable terms and conditions, making it an essential step in obtaining financial assistance," said Sidharth V, CRO at KreditBee, an online personal loan app.

When applying for a loan, borrowers are required to provide a valid identification proof document to establish identity.

"The specific documents accepted may vary depending on the country and the lender's requirements. Some valid ID proofs are Pan card, Voter ID card, driving license and Aadhaar card," said Sidharth.

Along with an ID proof, lenders also require valid address proof in order to process the loan application. Some valid address proofs are passport, Voter ID card, driving license, and Aadhaar card.

Borrowers should also include the latest salary slip or any document that shows income, such as a salary certificate or bank statement showing regular salary credits.

"This documentation verifies the applicant's financial stability, enabling lenders to determine their credit limit along with their ability to repay," said Anil Pinapala, CEO and Founder, FlexPay by Vivifi, an instant personal loan app.

A digital signature, also known as e-sign, is required to create a legally binding agreement between the applicant and the lender. It ensures mutual consent and compliance with regulatory requirements.