Personal Loan Disbursment Process

Loan Disbursement: Know Its Meaning & Process

April 05, 2022 • 28869 views

If you are planning to take a Personal Loan, it is essential to have understanding about, the Personal Loan disbursement process, and the repayment process to avoid situations like the loan amount disbursed but not credited. You should try to know as much as possible about the Personal Loan disbursement procedure especially to fund a financial emergency. This will help you ensure that you can get the loan on time to manage any financial need.

What is Loan Disbursement?

Loan disbursement takes place when the lender transfers the loan amount applied for by a borrower to the latter’s specified bank account. There are lots of several factors that are considered before a lender begins the disbursement process, including the verification and approval of the borrower’s details that were submitted during the loan application process.

So, what is the Personal Loan disbursement process? What is the Personal Loan disbursement time after approval that the lender will take to disburse your loan? How to check loan disbursement? Let us go through the complete application and disbursement process to understand Personal Loan better and avoid situations like a loan disbursed but not credited.

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Personal Loan Disbursement Process

Getting a Personal Loan is an easy way of financing a wide variety of needs. Whether you are planning your next vacation or renovating your home, Personal Loan is the best option to ensure cash flow whenever you are in need. Many banks and lending organizations offer affordable Personal Loan solutions to customers.
If you know all the steps involved in the Personal Loan disbursement process in banks, you can complete all the formalities on time and get the loan quickly. So, let’s check out this useful guide that will help you get started.

loan confirmation process

1. Beginning The Process

The Personal Loan disbursement process starts with the processing of your loan application. After you submit the form, the lender will either take a few hours in case of an online application or a week if you apply offline, to verify your credentials. Once the lender is satisfied with the information you have provided, you will proceed to the next step.

Apart from the application form, you will also be asked to submit a set of document proofs for verification. Make sure all your paperwork is duly verified, wherever required, and updated to avoid any delay in the process. The document requirement could change from lender to lender, however, the following is an indicative list:

ID proof

ID proof

Income Proof

Income proof

Income Tax Return

Income Tax Return (ITR)

Address Proof

Address proof

Bank details

Bank details

passport size photographs

Two passport size photographs


2. Loan Approval

Once you have submitted the loan application along with the required documents, the lender will initiate the approval process. Depending on the lender you choose, approval may take 2-3 business days. Approval may take longer, if your documents are not in order. So, make sure you thoroughly go through the documents required for the Personal Loan before submitting your loan application. Loan approval becomes faster if you are an existing customer of the lender. 

3. Loan Disbursement

If your loan is approved, the lender will send you an approval letter by e-mail or post. The sanction letter will mention that your loan application has been approved, along with other details like interest rate, loan amount, Equated Monthly Installment (EMI), etc.

Loan amount disbursed but not credited? No worries, because Personal Loan disbursement time can be up to 1-2 working days after approval. You can then go to the lender and get a cheque for the loan amount. Some lenders even mail the cheque to your address. In the last few years, most lenders have started crediting the loan amount directly into the borrower’s bank account.

The disbursed loan amount may differ from the amount sanctioned according to the agreement. The sanction letter is just a simple notification from the lender indicating that you are eligible for a particular loan under certain conditions. However, the disbursal loan amount is subject to various additional formalities that you must complete once the loan is sanctioned. 

Also Read- 9 Personal Loan Benefits You Need To Know

What Happens After Personal Loan Disbursement?

loan disbursement process

Loan Confirmation

Once the loan is disbursed, the lender will send you a confirmation letter for the same. Generally, it is sent by e-mail or post. The confirmation letter usually comes with a welcome kit. The welcome kit will contain detailed information about your loan, EMI, amortization table, EMI payment options, due dates, customer support, and much more.

Loan Repayment

After receiving the loan amount, you can start repaying it as per the loan agreement. EMI can be paid through Electronic Clearing Service (ECS) or a post-dated cheque.

If you already have an account with the bank from which you have taken the loan, you can also give a standing instruction for automatic EMI debit on a specified date every month. Pay your monthly EMIs on time as non-payment or late payments may attract penalties and adversely affect your credit score.

Being An Informed Borrower

It is always better to know everything about the Personal Loan before you apply for it. This way, you can make a good and informed decision. Don’t just accept the charges and terms laid out by the borrower. Understand them properly and try to negotiate for a lower interest rate if you can. Thoroughly check the loan documents, especially the interest rate, penalty, and repayment options, to avoid any errors.

Key Takeaways From The Personal Loan Disbursal Process

  • The interest rate applicable on your loan is based on your monthly income, credit score, and loan repayment tenure
  • You can transfer your loan from one lender to another at any time. But when you change lenders, you might be charged a penalty.

In Digital Lending, customers can avail of instant Personal Loans digitally. They do not need to visit the bank and fill out the application form. The entire process can be done easily on the lender’s website or mobile application.

After submission of Personal Loan applications, the data is checked using data analytics and AI. The borrower’s past repayment record is considered to indicate the possibility of the applicant repaying the loan amount. Once the bank is confident of lending the loan amount, the money is disbursed to the lender's account within hours. This was difficult with the old traditional lending methods.

Final Thoughts

Loan disbursement is straightforward, but every step is important. Though the process is not much time-consuming, you can ensure faster disbursement by choosing a lender like Poonawalla Fincorp.

Thanks to our simple, few-step online Personal Loan application process, you can apply and get your loan in no time. All you need to do is enter your details and input loan requirements to get started. So why go anywhere else? Apply Now.

Frequently Asked Questions

1. How to apply for Personal Loan online?

You can apply for a Personal Loan by following these three simple steps:
Step 1: Click on the ‘Apply Now’ button.
Step 2: Fill in the required details on the loan application form.
Step 3: Upload necessary documents.
On successful verification, the loan amount will be disbursed into your bank account instantly. 

2. What is the duration of Loan Disbursement? 

The duration of loan disbursement can range between 1 and 2 working days. However, it may vary from lender to lender. 

3. What is the procedure for Loan disbursement? 

The loan amount will be transferred from the lender to the borrower as part of the loan agreement. Upon successfully securing the loan, the entire loan amount is transferred to the borrower for use. 


We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Personal Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply

poonawalla fincorp team

Poonawalla Fincorp Team

Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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