Whether applying for a job or any type of credit, for a working professional, salary slip is one of the most important document. No other person would know its importance than what a salaried employee does.
But why is salary slip is important for getting personal loan or any type of credit (car loan, home loan, credit card, etc.)?
The answer is – credit worthiness of the personal loan applicant is judged on the basis of income stated in the pay slip. Irrespective of what salary you say to the lender, they will rely only after verifying the pay slip. Although income is not the only eligibility criteria on the basis of which loan application is approved or rejected. But it is certainly the most important criteria considered by major lenders in India. Also the loan amount is also decided on the basis of the income of the salaried person.
Although there is a minimum income requirement but there are lenders offering personal loan to low income earners. And higher the income, higher would be the chances of credit approval since repayment capacity of the individual is assumed to be good since the income is good.
Check out getting loan from co-operative banks when your income is poor.
What details financial institutions check in a salary slip?
Apart from your gross or net income mentioned in the payslip, banks or any lender check for:
- Authenticity of the document: This is cross checked by the company logo, signature and/or stamp of the person issuing the slip. Typically this person is from the human resource department of the employer. In many cases, if the pay slip is computer generated with no official signature, then lenders check for the company name, logo, address, phone number, etc.
- Details of the recipient: That is, on whose name the slip is generated, designation, employee code (if available), location of work, provident fund number, PAN number.
- Other details: Date issued, duration of the pay i.e. days worked, name of the bank in which salary was credited and the bank account number, joining date. If the applicant is experienced and has recently a new company, then income slip of the previous company is also asked.
Typically lenders ask for last 3 months slip. In some cases, bank statement for the last 3 months are also requested.
Non-availability of the document may result in rejection. However there are ways to get personal with no salary slip or income proof as follows:
- Against Fixed Deposit
- Against Securities
- Private Money Lenders
If you do not have pay slip and don’t want to go with above listed three options, then you can ask request bank by providing:
- Photocopy of the salary cheque: In India, there are many companies who give monthly cheque to their employees. If this is the case, make sure you take photocopy of the cheque received each month. This will act as a proof to validate that you are receiving salary each month, though in the form of a cheque.
- If income slip is not issued and employer directly deposits the monthly salary in the bank account then provide bank statement showing salary credited with the employer’s name.
- Offer letter showing salary details
- If you were employed earlier and recently joined a new job then show pay slip from the previous employer. This combined with the above 3 option should make your work done.
Lastly remember that approval or rejection is at the sole discretion of the lending company. And most importantly, never provide fake salary slip or income documents, as it may land you in a legal trouble and create problem in your career in the future.