When you apply for a Personal Loan, receiving a loan sanction letter is crucial. It serves as confirmation from the lender that your loan request has been approved. This Personal Loan sanction letter outlines important details of the loan such as the loan amount, tenure, interest rate, and processing fee. Go through this blog to learn in detail about this letter and understand its importance.
What is the Importance of a Personal Loan Sanction Letter?
A Personal Loan sanction letter can be considered a letter of acceptance issued by the lender that validates and authenticates the loan disbursal. Without the sanction letter, it is impossible to proceed with the loan application. Since the sanction letter contains important information, you can choose whether you want to proceed with the loan or not based on the terms and conditions mentioned in it.
Top 5 Features and Benefits of a Personal Loan Sanction Letter
A Personal Loan Sanction Letter is an important document that
outlines the terms and conditions of a Personal Loan. It is an official
confirmation from the lender that the loan has been approved and the
borrower can avail the funds as per the agreed terms.
Here are
the top 5 features and benefits of a Personal Loan Sanction Letter:
- Clarity on Loan Amount and Repayment Schedule: The Personal Loan sanction letter clearly mentions the loan amount sanctioned, the interest rate, and the repayment schedule. This helps the borrower plan their finances accordingly and ensures timely repayment of the loan.
- Legal Validity: Since the Personal Loan sanction letter is a legally binding document, it provides a level of security to both the lender and the borrower. It outlines the rights and obligations of both parties and helps avoid any confusion or disputes in the future.
- Quick Processing: Personal Loan sanction letters are usually processed quickly, making it easier for the borrower to access the funds they need without delay.
- Flexibility: Personal Loan sanction letters offer flexibility in terms of loan amount and repayment schedule, allowing borrowers to choose a loan that best suits their financial needs.
- Lower Interest Rates: Personal Loans usually come with lower interest rates than credit cards or other forms of borrowing. With a Personal Loan sanction letter, borrowers can take advantage of these favourable terms and save money on interest payments.
Overall, a Personal Loan Sanction Letter is an important document that provides clarity, security, and flexibility to borrowers. It is an essential tool for anyone looking to access funds quickly and efficiently.
What Does the Loan Sanction Letter Include?
Based on the loan sanction letter, you can also negotiate with other lenders to get the best Personal Loan interest rates and terms. The Personal Loan sanction letter format and content may differ from one lender to another. However, the details in each loan sanction letter always remain the same. A loan sanction letter includes:
- Your Personal Loan application number
- The loan category under which the loan is offered
- Your residential address
- Sanctioned amount
- Rate of interest
- Accepted loan tenure
- The base rate for interest rate calculation
- Applicable EMI
- Interest type (floating/fixed)
- Processing fee
In addition to the above-mentioned components, the lender will also mention the terms and conditions applied to a Personal Loan. For instance, the letter will contain information regarding its validity, conditions, and situations under which the sanction letter may be revoked, and details for processing the loan application.
ALSO READ :- Check Your CIBIL Score Today To Apply For A Personal Loan
What are the Documents Needed in a Personal Loan Sanction Letter?
Procuring the required documents is the first step to take while
applying for a Personal Loan or a Business
Loan.
Below are the documents required for a Personal Loan
sanction letter:
- Filled loan application
- Identity proof (KYC documents)
- Address proof (residential)
- Last 6 months’ bank account statement
- Last 3 months' salary slips
- Form 16 or income tax returns
What are the Steps Taken by the Lender to Issue a Personal Loan Sanction Letter?
After receiving the loan application, the lender conducts the following tests to validate your eligibility for a Personal Loan or Business Loan:
- Credit score and credit history
- Applicant’s debt-to-income ratio or ability to pay back the loan amount
- Employment and income status of the applicant
- Source of income
- Outstanding debt if any
- The authenticity of the submitted documents
Once the lender is satisfied with the documents provided, you will be issued a loan sanction letter. To increase your chances of getting loan approval, you can use an online Personal Loan eligibility checker before applying for the loan. Based on that, you can focus on adjusting the factors that require improvement to enhance your likelihood of getting a Personal Loan.
What is the Validity of a Personal Loan Sanction Letter?
Typically, a loan sanction letter is valid for up to 6 months. If
you are borrowing a Personal Loan, you need to take the loan within 6
months of receiving the loan sanction letter. In case the loan
sanction letter expires or gets revoked, you can start the loan
application process again and submit all the necessary documents for a
fresh loan sanction letter.
You can also use a Personal Loan EMI
calculator online to determine your monthly EMIs and loan tenure.
This will help you manage your finances in a streamlined manner to
avoid any late payments that might hamper your CIBIL score.
To Conclude
Understanding the benefits and features of a Personal Loan sanction letter can help you ensure its availability at the time of approval of your loan application. Once you receive the loan sanction letter, carefully go through all the terms and conditions, loan amount, EMI amount, and other details before going forward with the loan. Now that you understand more about Personal Loan sanction letter, feel free to go ahead and apply for a Personal Loan today!
