A personal loan is a form of unsecured debt that can be used to cover a wide range of expenses. Unlike secured loans, personal loans do not require collateral and can be approved quickly. However, because personal loans are unsecured, lenders typically require borrowers to provide proof of income, such as salary slips.
For salaried individuals, this requirement is usually straightforward, as they can provide their salary slips as proof of income. However, if you’re self-employed, obtaining a personal loan without salary slips can be challenging. Fortunately, there are several alternatives available to secure an instant personal loan without salary slips, which we’ll explore in further detail below.
1. Providing Alternative Income Documentation
If you are self-employed and have an active business contract, it’s possible that you may not be able to provide salary slips as proof of income. In such cases, you can still secure a personal loan by providing alternative income proof to the lender.
These may include documents such as bank account statements, income tax returns (ITR), or an income certificate that can demonstrate your steady income. Additionally, if you don’t have a salary account, Form 16 can also be a suitable alternative to provide to the lender when applying for a personal loan.
2. Maintaining a Strong CIBIL Score
Maintaining a CIBIL score above 700 is considered excellent on a scale of 300–900. This score demonstrates that you lead a disciplined credit life and consistently pay your dues on time. Having a high CIBIL score also shows lenders that you are likely to remain disciplined in making timely payments towards your personal loan EMIs.
When you have a good score, lenders tend to trust you more, and this could increase your chances of getting approved for a personal loan even without a salary slip. Additionally, having a high CIBIL score can also help you secure favorable interest rates for your personal loan.
3. Leveraging a Good Relationship with the Bank
Establishing a strong relationship with your bank can benefit you when applying for a personal loan. By having a pre-existing account with the bank, whether it be a savings or current account, you may not be required to provide any documents when applying for a loan.
Additionally, if you have previously taken out a loan from the bank or have a credit card and have paid all dues on time, this demonstrates a good credit record with the bank. You can hire a good debt collection service to manage your banking debts better. In such cases, the bank is more likely to approve your personal loan without the need for a salary slip.
4. Securing the Loan with Collateral
Providing collateral is a convenient way to obtain a Personal Loan since it assures lenders of the repayment of the loan. Unlike income-based loans, collateral-based loans don’t require borrowers to provide their salary slips or income details.
This is because the collateral offered acts as a security for the loan. Property, jewelry, and vehicles are commonly used as collateral. However, borrowers should keep in mind that if they default on the loan, the lender may seize the collateral offered to recover the loan amount.
5. Applying with a Co-Applicant with Steady Income
To increase your chances of getting a personal loan, you may consider applying with a co-applicant who has a stable income, especially if you are self-employed and don’t have a salary slip. Having a co-applicant can balance the creditworthiness of the lender and reassure them that the loan will be repaid on time.
This is because, with a co-applicant, the lender can consider both your income sources, making it easier to approve your personal loan application. It’s important to note that your co-applicant should have a good credit score and a steady income to improve your chances of getting approved for a personal loan.
Obtaining a personal loan without a salary slip may seem challenging, but it’s not impossible. By exploring alternative methods, such as using a co-signer or collateral, you can increase your chances of getting approved for a personal loan.
However, it’s important to always assess your financial situation before taking on any debt. Using a personal loan EMI calculator is an essential tool to estimate your monthly payments and ensure that a personal loan is affordable for you. By taking a thoughtful and cautious approach to obtaining a personal loan, you can access the funds you need without putting your financial stability at risk.
Tanvi Kaushik specializes in Content Marketing and works with the Digital Team. Tanvi writes to-the-point articles on personal finance and budgeting that are truly appreciated by her readers. She is committed to making money matters easy to understand, even for the layman. Her commitment to her work doesn’t stop her from pursuing her hobbies of hiking, trekking, and going on adventurous trips.