Tuesday, April 16, 2024

Loans

What is the Process of Personal Loan Disbursement?

Personal Loan

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Personal loans have become an extremely popular credit product in India, with disbursements crossing ₹3 lakh crore in fiscal year 2022. With large ticket sizes reaching ₹40 lakh, flexible tenure of up to 6 years, and no restrictions on end-use compared to home or auto loans, personal loans offer funds for a variety of needs.

If you have been considering a personal loan for any reason, personal or for business, it is important to analyze step-by-step process about taking an instant loan. You can follow different lenders for loan disbursement and know the complete process from start to initialization of your loan to transfer the funds to your Demat account.

Personal Loan Application

Starting with the first step of your instant personal loan online. You need to identify your loan requirement and shortlist lenders that can meet your required funds & have better interest rates. You can apply directly on lender websites or through loan aggregators. The application form requires you to fill in personal details, income and employment information, loan amount and tenure for loan repayment, as well as documents for KYC and income proof.

Loan Processing

Once you submit the loan application, the lender will verify all details and documents submitted. This includes employment verification through your HR or from the company records, your details such as income tax returns, bank account statements, credit bureau reports, and CIBIL score check will be evaluated accordingly. If all parameters meet the lender criteria, your loan is good to be processed. Some lenders may conduct a field investigation. But with the digital era, lenders can access all the details & platforms, such as Fibe can offer your instant loan without any trouble in visiting any office.

Loan Clearance

After processing, you will receive an official loan sanction letter or email specifying the loan amount, interest rate, processing fees, and other charges applicable. This letter is valid for a specific period during which you have to complete documentation formalities.

Documentation

The lender will share a list of documents required to be submitted for loan disbursement. This includes your KYC papers, income proofs, ECS mandate for auto-debit of EMI, post-dated cheques, loan agreement copies, standing instructions for the account, guarantor or co-applicant documents, and any other paperwork mentioned in the sanction letter. Only after all documents are submitted and verified will the loan be ready for disbursal.

Technical Evaluation

If you are salaried, the lender will do a re-verification of your employment status and salary prior to disbursal. Self-employed individuals may have to submit updated bank statements and balance sheets. The lender wants to ensure your financial situation has not undergone any major change since the sanction.

Creation of Loan Account

Simultaneously, the lending institution will open a loan account in your name and generate a unique loan account number which identifies you as the borrower. An amortization schedule outlining the exact EMIs payable on a monthly basis is drawn up and provided to you.

Obtaining NOC from Existing Lender

If you already have a loan running with another lender, then a No Objection Certificate (NOC) may be required from them before the disbursal of a new loan. This ensures your existing credit obligations are in order.

Payment of Advance EMI & Other Charges

Before disbursal, you have to make payment of the first EMI in advance along with the one-time processing fee, documentation charges, cheque bounce charges, etc., as applicable. Lenders will not release loans unless these upfront amounts are received.

Creation of E-Mandate with NACH

Lenders will set up an Electronic Mandate through NACH (National Automated Clearing House) for auto-debit of your account for EMI payments. This enables the timely recovery of monthly installments. You are required to fill in and sign the NACH mandate form.

Disbursement

Once all steps are completed, the loan amount sanctioned is disbursed directly into your bank account electronically through NEFT/RTGS transfer. Turnaround time from approval to disbursal can range from 2 days to 2 weeks, depending on the lender and the completeness of documentation.

Post-disbursement Follow-up

After the loan is disbursed and the EMI cycle begins, many lenders have a post-disbursal follow-up and tele-verification process. This is done through calls or visits to confirm receipt of funds and set expectations on repayment.

Tracking Your Loan Account

You can easily track your loan amount from instant personal loan apps and even monitor your loan through the lender’s website or app. It provides information on the total payment made, or which will be due for the next EMI,  check due date, outstanding principal, etc. You can also access account statements online.

Conclusion

So, in short, while the disbursement process might seem lengthy, it is conducted to ensure complete diligence and risk protection for both the borrower and lender. Following the timeline and providing accurate information will make sure you get the personal loan Hassle-free and on time to meet your financial needs.

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