Personal loans can serve a myriad of purposes, from financing higher education to covering medical expenses to running a household in case of a crisis. Moreover, you need to submit minimal documents to get the loan approved. However, if you have an Aadhaar card, which helps in e-KYC, the verification and approval process is simpler and faster. Lenders use your Aadhaar as identity and address proof, two key factors to approve a personal loan on Aadhaar.
This blog explains all the details and the process of taking an Aadhaar card loan.
What Is an Aadhaar Card Loan?
Names, such as ‘personal loan on Aadhaar’ and ‘Aadhaar card loan’ can mislead many. So, understand that an Aadhaar card loan doesn’t imply borrowing money against an Aadhaar card.
In simple words, it is an unsecured personal loan that requires minimum documentation. You can use an Aadhaar card as a paperless e-KYC document for identity and address proof to fulfill eligibility criteria for biometric verification. It is supported by other financial documents, such as bank statements, PAN card, and salary slip.
What Are the Eligibility Criteria to Avail of Aadhaar Card Loans?
To get an instant loan using your Aadhaar, you must meet the following eligibility criteria:
- Resident of India
- Must be within the minimum and maximum age bracket
- Should own a valid UIDAI (Unique Identification Authority of India) ID.
- Hold minimum required credit score
- Can be self-employed or salaried individual but must earn the specified minimum salary
What Are the Documents to Submit with the Loan Application?
To avail of an Aadhaar card loan, you need to submit documents for identity, address, and salary proof. Your Aadhaar card must be supported by:
- PAN card
- Passport size photo with a duly filled loan application
- Address proof- utility bills, passport, rent agreement
- Income proof- salary slips, ITR, bank statements
- Any other document required by the bank or lender
Your identity proof can also include the masked Aadhaar card as it will ensure that your Aadhaar is not misused. Here’s how you can download masked Aadhaar.
How to Apply for a Personal Loan Using an Aadhaar Card?
Here are the steps that you need to follow to get a personal loan on Aadhaar:
- Check your eligibility for the loan and visit the official website of your preferred bank or lender.
- Click on the ‘Personal Loan’ option and fill in all the required details, such as occupation, monthly income, city, contact number, etc., to submit an online application.
- Complete the KYC process by uploading a scanned copy of your Aadhaar card.
- The bank will verify your application and on your eligibility, it will approve your loan.
- Once everything falls in place and a representative is assured of your eligibility, the bank will credit the loan amount in your account.
What Are the Benefits of a Personal Loan on Aadhaar Card?
Aadhaar card loans have gained popularity because of an array of benefits they offer to borrowers, including:
- A single document, i.e., your Aadhaar card, as proof of your address, age, identity, photo, and citizenship.
- Verification is quicker as the biometric data is linked to your Aadhaar, which ensures faster disbursal of loan.
- You don’t need to provide any collateral
- A hassle-free documentation process for banks and customers.
- Your Aadhaar card serves as a valid e-KYC document, which mitigates the chances of fraud.
- Flexible repayment terms based on your financial abilities.
- No restriction on the use of funds
- In some cases, if you can’t provide a copy of Aadhaar, the UID number is enough to verify your identity.
Why Should You Maintain a Healthy Financial Profile?
A healthy financial profile can work wonders to get your loan application approved. You can ensure a good financial record by:
- Maintaining a high credit score- It helps lenders assess your creditworthiness. A good CIBIL score is proof that you are capable enough to manage your debts efficiently.
- Securing a low debt-to-income ratio- The DTI ratio shows your ability to repay the loan based on your income.
- Showing a stable source of income- A reputed and steady job with credible employment history also showcases your reliability.
The above-mentioned points have made it apparent that seeking a personal loan using an Aadhaar card is quite easy and needs minimal documentation as compared to traditional loans. Banks, financial institutions, and lenders have simplified the process for borrowers to take instant loans. They just need to follow a few hassle-free steps to apply for the loan. Also, there is no restriction on using the loan amount.
Just make sure that all your documents are in order and that you fulfill the eligibility criteria before submitting the loan application. The rest will be seamless, simple, and quick.
Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India’s first app-based credit-line. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters and when they want to get a loan. He has made it his life’s mission to help and educate people on various financial topics, so email him your questions at [email protected].