Salaried people who get their salaries directly in their bank account find applying for loans from conventional banks easier. But that doesn't mean there are no opportunities for people who wish to get a personal loan against a cash salary. If you are one of them, this article is just for you. In this article, we’ll discuss some ways by which you can apply for a personal loan on a cash salary.
1. Regularly Deposit Your Cash Salary into a Bank Account
Even if the salary is paid in cash, one of the most uncomplicated ways to prove income stability is to deposit that cash into a bank account regularly. Loan providers check your bank account transactions to determine whether you have income to support corresponding expenditures and repay the personal loan on cash salary.
The more often your salary is deposited into your bank account, the more proof and more documentation you will have of your income. Over time, this can serve as an alternative to income statements and salary slips.
2. Prepare Alternative Documentation to Prove Your Income
You'll have to provide alternative proof since you don't have pay slips or an employer's direct deposit in your bank account. Some of the most helpful documents that you can prepare include:
- Employment Contract or Offer Letter: This formal document from your employer can help you tell your employment status and salary to the financial institution.
- Income Tax Returns (ITRs): Provided you submit timely returns of your income, your ITR can serve as proof of your source of income. This works even if the salary is paid in cash. In any case, your tax returns would have an official record of your income.
- Employer Affidavit or Statement: You can ask your employer to give you a formal statement or an affidavit stating the monthly salary he/she gives you. This will serve as proof of income, especially if it is detailed and comes from a reputable source.
3. Explore Financial Institutions Open to Cash Salary Earners
When it comes to exploring financial institutions open to cash salary earners, both traditional banks and NBFCs are there. While banks may have a detailed documentation process, NBFCs offer quite some flexibility while offering a loan for a cash salary person.
These financial institutions are typically customer-friendly and may offer lenient terms, such as fewer income documentation requirements. Before making your decision, review multiple lending institutions and banks online and compare their terms, including interest rates, processing fees, and repayment periods.
4. Strengthen Your Credit Score
The most important factor that financial institutions consider when granting loans is credit score. A good credit score indicates that you have taken loans before and paid them off successfully. Basically, it proves you have been responsible enough regarding your credit, so your chances of getting a loan approved are higher.
If you have a strong credit score, financial institutions will be more confident about your repayment and easily approve your cash salary loan in India.
5. Use Collateral or a Guarantor
Another way to strengthen your loan application is by providing collateral or getting a guarantor. Collateral means offering an asset such as property, gold, or any other valuable item for the financial institutions to hold to approve an urgent cash loan without a salary slip. This reduces the risk involved for the financial institution and raises your chances of acquiring the loan even if you receive a salary in cash.
You can also ask for a guarantor with a good credit profile to guarantee your loan. A guarantor is a person who agrees to pay back the loan if you can't. However, they are not responsible for the loan if you can make timely payments. Having a guarantor may offer extra security to the lending institution, which increases the chances of getting a mini cash loan without income proof.
Steps to Apply
If you need to apply for a cash salary loan, typically, you can follow these steps:
- Look for a lending institution and compare your offers. Check if you qualify for their loan.
- Fill out the application form online and complete all the mandatory paperwork.
- Once you receive approval, pay close attention to the terms and conditions.
- Sign the loan paperwork, and the funds will be credited to your account in 2-3 business days in most cases.
Conclusion
Though receiving a cash salary may complicate the process of getting a personal loan, it isn't by any means impossible. If you take your time to do things properly, you will see that getting a personal loan against a cash salary is pretty much possible, making it easy to manage your financial requirements.
