Borrowing money has always been the go-to option for people who need cash right away. It is true that there are hundreds of banks and credit institutions ready to lend money to those in need. There are different types of easily recognizable loans. For example, if you are looking for short term loans, you can go for salary and personal loans. On the other hand, mortgages are the right options for you if you need to buy property like houses and cars.
While there are many options for borrowers, personal loans are the most common. Whatever your borrowing goal, it is possible to seek help from the bank. People who receive personal loans use the money primarily for personal purposes, such as monthly budgeting, tuition, and emergencies.
If you are from India, it is easy to apply for a personal loan using your Aadhaar. Let’s take a look at some key points and how you can apply for a personal loan.
What is an Aadhaar personal loan?
An Aadhaar personal loan is the type of loan that you can avail with your Aadhaar card. This loan has the same characteristics as a classic personal loan. The only difference is that it is attached to your Aadhaar card for easier processing and release. So when you have your Aadhaar card with you, you can easily enjoy the privilege of personal loans.
What is the Aadhaar card?
Now you might be wondering what is so important with the Aadhaar card. For starters, an Aadhaar card is proof that you have been given a 12-digit number called Aadhaar. This is a dematerialized electronic document knowing your customer (KYC) with all the criteria for a borrower to be eligible for a personal loan. This number can be acquired by any Indian citizen, including non-resident passport holders and resident aliens who have stayed more than 182 days in the country.
Once you have your Aadhaar card, you can easily apply for personal loans in the country. What makes the app more convenient is that all your identity information is saved on your Aadhaar card. This way the lender can get all the personal information they need from you. Thus, making the process easier.
The Single Identity Authority of India, also known as UIDAI, collects all biometric information and data from its citizens and residents. UIDAI is a statutory authority established to help the government implement its biometric identification system. Since a reliable and trustworthy authority issues Aadhaar, it explains why lenders rely on it when providing personal loans to borrowers.
How to apply for a personal loan on Aadhaar?
The process is fairly straightforward and applies to all borrowers and lenders.
Check your eligibility
First of all, you must check if you are eligible for a personal loan. While those with an Aadhaar card may be eligible to borrow loans, the amount you can take out will vary. So check the amount you can borrow online. If your lender has their own website, you can check it out quickly in just two minutes.
After you have verified your eligibility, the next thing you need to do is compare the offers. Don’t settle for high interest rates. Keep in mind that there are a large number of banks and lenders offering personal loans if you have an Aadhaar card.
All you have to do is list them carefully and compare the best deal you can get. Look for more than one option and make sure you do your due diligence. Almost all lenders now have their websites. You can search them on Google and visit their websites to get the information you need.
Choose your package
More often than not, you will have the option to customize the amount you can borrow as long as it is within the limit you can get. You can also choose how much time you will pay for it. When choosing a plan, be sure to select the best option that suits your financial capacity.
For example, if you think you can pay off the loan in three months, choose that period to save on the interest rate. If you can’t, you can opt for a longer payment term for convenience. Also, choose the loan amount according to your financial needs. Don’t borrow more than you need to avoid hassle down the road.
Apply online and upload your documents
The internet has done so much in the financial industry. These days, you don’t need to go to the physical branch of your chosen lender to apply and submit your documents. Since it is common to have a website, you can simply visit your lender’s website, apply online, and upload your documents.
Make sure you upload the full set of necessary documents for your lender to assess your application. If you do not have complete documents, your application may be rejected immediately.
Wait for your loan approval and get the loan amount
The last step is to wait for your loan approval. Once approved, you will get the loan amount you requested. Carefully read the terms of your loan repayment.
What you need to know about Aadhaar personal loans
When applying for Aadhaar personal loans, you need to consider factors other than your eligibility. The fees and the list of documents that you must submit play a vital role in your application.
Fees to consider
The first type of charge to consider is the interest rate. There is no fixed interest rate because everything will depend on your lender. There are lenders with rates starting at 1.33% per month. It can increase depending on a lot of things. To get the lowest interest rate, compare the current offers in the market and go for the one with the best rate you can tolerate.
Another fee that you have to pay is the loan processing fee. Again, this will depend on your lender. The rate usually starts between 2% and 8% of the approved loan amount. Lenders deduct these processing fees up front before they pay you the remaining loan amount.
Penalties are something else. If you delay your payment, for example, you will have to pay an additional 2% or more per month of the overdue loan amount. This is an added expense that you may want to avoid if your budget is tight. Penalties can be avoided by paying on time.
Some lenders also charge bad checks. If you are using post-dated checks to pay your monthly dues, make sure your account has enough money to cover the payment. Otherwise, you will have to pay an additional Rs 500 each time your check is bounced.
Although it is rare to have fees on loan cancellations, you should remember that loan processing fees will always be deducted. If you cancel your loan, the processing fee serves as a cancellation fee that you have to bear.
Documents required when requesting
There are mainly three paper requirements when applying for Aadhaar personal loan: ID, proof of address, and proof of income. Your ID can be your PAN card, Aadhaar card, voter card, Indian passport or driver’s license. You can submit the same requirements or your utility bills to serve as proof of address. To justify your income, you need your bank statements for the last three months.
These requirements apply to both employed and self-employed borrowers.
Personal loans are the easiest type of loan to get, and if you have your Aadhaar card, you have a good chance of getting your loan approved.