When you apply for a loan, the lender evaluates your application and seeks certain documents before approval. One of the essential documents is the Income Tax Return (ITR). Salaried applicants will have an ITR, but non-salaried individuals with non-taxable income may find it challenging to furnish documents such as income proof or ITR when applying for a loan. Let’s find out how to get a loan without submitting an ITR.
Personal loans are a form of unsecured credit where the lender does not require collateral for disbursing funds. These loans are approved primarily based on the applicant’s income and KYC details. Some lenders may impose a minimum income and credit score requirement for loan disbursal. If you have a stable income, haven’t defaulted on any previous loan, and can provide adequate repayment proof, your loan is most likely to be approved. A salary account is ideal in this situation, allowing the lender to assess the flow of funds into your account.
An ITR is mandatory for self-employed, particularly in case of higher loan amounts, but salaried persons can show alternative documents like Form 16 and income proof. If the lender is satisfied with your income and clean financial history, getting a loan becomes easier without an ITR.
Loan against securities
When using collateral or security to borrow a loan, financial institutions treat such loans as low risk and consider giving loans without an ITR. The collateral could be against your investment, such as fixed deposits, mutual funds, etc. If you apply for a loan against securities, the chances of getting it are high.
Apply with a co-applicant
If you do not have an ITR, particularly if you are self-employed, consider applying for a joint loan with a co-applicant with an ITR or other income proofs. In the case of a joint loan, lenders consider the combined income of the applicant and co-applicant, which can help improve the primary applicant’s overall loan eligibility. As a result, a joint loan may help you access a larger quantum of funds.
Adhil Shetty, CEO, BankBazaar.com, says, “Adding a co-applicant to a loan will increase your borrowing capacity and help you bridge gaps in your loan application. If you are a non-salaried person, it makes sense to add a co-applicant to get a larger loan amount and instil confidence in the lender that you are a risk-free borrower and can repay the loan as per the agreement.”
Apply for a smaller loan
If you don’t have an ITR or other necessary proof for your desired loan, consider applying for a smaller loan. Lending institutions tend to clear loans for smaller amounts with basic income proof instead of asking for the whole gamut of documents. Approval times for smaller loans also tend to be faster. While a smaller loan may only partly fulfil your requirement, it is relatively easier to procure, given its lower risk. The repayment, too, may be more manageable, given the amount.
Approach your relationship manager
If you have held an account with your bank for a long time, you will likely have a relationship manager. Reach out to your manager and explain your situation. Build a strong case in your favour by providing proof of a stable income and repayment capability, along with the necessary documents. A strong credit score and healthy credit history can further strengthen your case.
Explore loans under special schemes
Banks sometimes have specific schemes under which they offer loans to select applicants, such as those without an ITR. Both salaried and non-salaried applicants can apply for these loans after satisfying the scheme’s eligibility criteria. Providing bank statements with regular transactions in the account can further improve your chances of getting approved for such loans.
These are a few tips which can help you get the loan you need without an ITR document. But remember, terms and conditions for loan approval can differ from lender to lender. Take your time to read the loan terms before committing to them.
* An ITR is mandatory for self-employed, particularly in case of higher loan amounts, but salaried persons can show alternative documents like Form 16 and income proof
* If you have a stable income, haven’t defaulted on any previous loan, and can provide adequate repayment proof, your loan likely to be approved