The introduction of personal loan apps in the world of personal financing has significantly altered how these advances were availed. Today, it just takes your ID and address proof, your income proof, and a few other documents to get your loan processed. But what if you do not have a salary slip? Not all employees get a salary slip from their employer, especially if they work as a freelancer or on a contract basis. With the rising culture of freelancing or self-employment, financial institutions came up with modified rules that allow you to apply for a personal loan even without a pay cheque.
Read on to understand how you can avail a personal loan without a paycheque.
What are Personal Loans Without Pay Cheque?
Personal loans without pay cheques, more commonly known as loans without salary slips, refer to advances that do not need strict income documentation. Personal advances are unsecured financing solutions. This makes them high-risk undertakings for lenders. Therefore, most lenders have strict income proof requirements as assurance against the loan. Usually, these loans are provided by financial institutions, including NBFCs, against the borrower’s income capacity.
However, not all individuals with a suitable income receive salary slips due to the nature of their occupation and the remuneration so received. It is usually the case with self-employed individuals who, even when not running a well-recognized brand, have a decent business of their own with suitable revenues and profits. Since personal advances are tailor-made for employed individuals, income documentation often turns out to be a roadblock for people with unconventional jobs.
But this is not true anymore. Several lending institutions, especially NBFCs, have undertaken to make personal financing possible and conveniently available through the elimination of salary slips or pay cheques. Some of the most reputed ones also have their dedicated personal loan apps to take financing a step ahead through home-based application and approval. Let us delve into more details regarding these advances to enable convenient financing for individuals who lack salary slips as well.
Personal Loan Income Proof Alternatives to Pay Cheques
Individuals who do not possess salary slips or pay cheques as income proof can still avail of personal advances through lending institutions and personal loan apps. They can do so by fulfilling other requirements and using borrowing tips, which can include the following.
1. Provide alternative income documents
Individuals who do not have a salary slip can still provide additional income documents to show their income stability. For instance, if they have a registered business with well-maintained accounts, they can provide the audited financial statements of their firm, including the Balance Sheet and Profit & Loss Account.
If the individual lacks these documents, they can furnish the Income Tax Returns filed for the previous 2 to 3 years to suitably establish their annual income. Bank account statements for the past 6 or more months also serve as proof of income for these prospective borrowers. An income certificate issued from an eligible authority can also serve the right for the purpose.
2. Meet a minimum credit score
As unsecured advances, these loans require the borrower to carry high creditworthiness, which can be well-presented with their credit score. To avail a personal loan, whether through the lender’s website, a personal loan app, or in person, you must make sure that you have a high credit score. In case, your credit score is in the lower range, you will have to work towards improving your score by paying off your debts and closing your loan accounts.
3. Maintain good relations with the lender
Another aspect that can work in favor of the individual availing a personal advance with no pay cheque or salary slip is to maintain good relations with the lender. A well-rapport with a suitable repayment history with the lender for previous loans and advances can help secure the advance with ease against minimal documents.
4. Co-apply for the loan
If you seek to avail a personal advance but do not have salary slips or pay cheques to testify, you can also alternatively choose to co-apply for the advance with an individual holding a high-income profile with suitable stability. This combines application eligibility and helps with easy loan approval at favorable terms.
5. Provide an asset as collateral
As the last resort, you can also choose to apply for a personal loan and provide an asset as security to back up for the associated risk. However, it is not appreciated by many borrowers looking for financing as not all may own the necessary assets to collateralise. Instead, one can thus look out for personal loan apps that provide mid-ticket financing against simple and minimal documentation only.
If you are thinking about applying for a personal loan, whether through a personal loan app or otherwise, it is best to check out other features and facilities associated with the advance as well. Also, make sure that you know the interest rate applicability and other charges involved for a better assessment of the cost of your loan, and plan repayments accordingly.