In India, employers often make salary payments through direct credit in the bank, cheque, or cash. And not every company gives pay slip or salary slip at the end of each salary cycle due to whatsoever reasons.
For individuals who get salary directly credited in account every month, getting a personal loan is not very difficult (provided they meet all other criteria) since they can show bank account statement or salary slip as an income proof.
But those who get salary in cash or no pay slip can have problem when seeking any type of loan or credit card. This is because lenders ask for pay slip or bank statement to verify the salary and evaluate credit worthiness of the applicant. And in case of non-availability of these documents, lenders have no way to verify and the application may even get rejected.
So in such cases where salary slip is not provided by the employer, how can an individual get personal loan?
Listed below are three options to get personal loan when no salary slip or income proof is available:
Against FD: If you don’t get pay slip then opening a fixed deposit account and taking personal loan against the same is recommended. The money kept in FD will act as a security and lenders offer loan amount which is minimum 85% of the FD amount. Since this is a secured loan, the interest rate is on a lower side compared to traditionally taken personal loan, which is an unsecured loan.
Against Securities: Another type of secured personal loan is against securities. You can keep LIC policy, mutual fund, shares, gold, and few others. The biggest benefit of such loan is that banks charge interest only on the money which is utilized and not on the entire loan amount. Similar to loan against FD, interest rate is on a lower side for this option. Loan amount depends on the value of the securities.
Both the above mentioned options requires no income proof or salary slip.
You can also get personal loan against credit card.
Private Money Lenders: Although this option is not recommended because of high interest and bad recovery process, they should be considered as a last option, if the money required is urgent. These lenders are basically local money lenders (not all are government approved).
How you can still gather proof?
If you are getting salary in cash on a specific date and you deposit the whole amount in your bank account then you can show your passbook entry or bank account statement as a proof to the lender while applying for a personal loan. Bank statement of 1 year is a valid financial document to show your income.
Ask for a letter from your employer stating that salary has been paid in cash on a particular date. This may help to a certain extent. Especially co-operative bank can consider your application, as their eligibility criteria are not very stringent.
IT return statement: If you are filing income tax return every year then it can act as a best proof for getting a personal loan.