If you are planning to take a personal loan, it is essential to have as much knowledge as possible about the loan and the entire approval, disbursement, and repayment process. Especially to fund a financial emergency, you should try to know as much as possible about the loan disbursement process. This will help you ensure that you can get the loan amount on time to manage any type of financial need.
So, what is the personal loan disbursement process? How long will it take for the lender to disburse your loan? Let us go through the complete application and disbursement process to understand personal loans better.
Nowadays, applying for and 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 loans are the best option to ensure cash flow whenever you are in need. Many banks and lending organizations offer easy and affordable personal loan solutions to customers.
If you know all the steps involved in the process, 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.
- • 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 a bit from lender to lender, however, the following is an indicative list:
-Income Tax Return (ITR)
-Two passport size photographs
- • 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.
- • 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.
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.
- • What happens after loan disbursement
- 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 plainly 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
- • The interest rate applicable on your loan is based on your monthly income, credit score, and loan repayment tenure
- • Repayment process takes place after the personal loan disbursement
- • You can transfer your loan from one lender to another at any time. But when you change lenders, you might be charged a penalty.
- • Technology plays an important role in personal loan disbursement
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.
As you can see, 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.