Understanding Personal Loan disbursement process
If you are planning to take a Personal Loan, it is essential to know as much about the loan and the entire approval, disbursal and repayment process. Check out this post to understand this process in detail.
If you are planning to take a Personal Loan, especially to fund a financial emergency, you should try to know as much about the loan disbursal process as possible. This will help you ensure that you can receive the loan amount in time to manage the emergency.
So, what is the Personal Loan disbursement process? How much time will it take for the lender to disburse your loan? Let us go through the entire application and disbursal process to understand Personal Loans better.
- Applying for a Personal Loan
The first step of the loan disbursal process is the loan application. Once you have selected a lender, you will then be required to apply for the Personal Loan. Along with a duly filled loan application form, you will have to submit documents such as:
- ID proof
- Address proof
- Income proof
- Bank statements
- Income Tax Returns (ITR)
- Two passport size photographs
- Loan approval
Once you have submitted the loan application along with the required documents, the lender will then initiate the approval process. Depending on the lender you select, approval can take 2-3 working days. The approval can take longer if your documents are not in order. So, make sure that you thoroughly check the documents required for the loan before submitting your loan application.
Loan approval is generally faster if you are an existing customer of the lender. For instance, you can consider the same bank for your Personal Loan in which you have your Savings or Salary Account.
- Loan disbursal
If your loan is approved, the lender will then send you a sanction letter either through e-mail or by post. The sanction letter will mention that your loan application has been approved, along with other details like interest rate, loan amount, Equated Monthly Instalment (EMI), etc.
Personal Loan disbursement time after approval can range from 1-2 working days. You can then collect the cheque of the loan amount by visiting the lender. Some lenders also mail the check to your address. In the last few years, most lenders have started depositing the loan amount directly into the bank account of the borrower.
What happens after loan disbursal?
- Loan confirmation
Once the loan is disbursed, the lender will then send you a confirmation letter for the same. This could be sent through e-mail or by post. The confirmation letter generally comes along with a welcome kit.
The welcome kit will have detailed information about your Personal Loan, EMI, amortisation table, EMI payment options, due date, customer support and more.
- Loan repayment
After receiving the loan money, you can start repaying it as per the loan agreement. EMIs can be paid through Electronic Clearing Service (ECS) or post-dated cheques.
If you already have an account in the bank from which you have taken the loan, you can also give standing instructions for automatic EMI debit on a fixed date every month. Do pay your monthly EMIs on time as non-payment or delayed payment could result in penalties.
Being a wise borrower
To be a wise borrower, one should try to know as much about the loan as possible. Knowing the basics like Personal Loan disbursement will make the entire process of taking the loan more convenient and easy.
Do check the loan documents thoroughly, especially the interest rate, penalty and repayment options to avoid any errors in the future.
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