Does a Top-up Personal Loan Require Documents and Verification?

Last Updated : Sept. 21, 2020, 10:40 a.m.

A top-up personal loan is an amount given over and above the running personal loan to meet your additional funding needs. You can apply for the same at the lender where your personal loan is running. You can also get a top-up amount on doing a balance transfer to the new lender. But the question remains, do you need to submit documents to get a top-up personal loan? What are the verifications that lenders will carry before approving the same? The answer to these questions may not be a straightforward one. So, you should read this post to know the answer.

When Can You Get a Top-up Personal Loan Without Documents?

You don’t need to submit documents when you apply for a top-up personal loan at the existing lender where you also have a salary account relationship. In such a case, the lender gets an idea of the salary you are getting and decides the loan amount accordingly.

When Do You Need to Submit Documents to Get a Top-up Personal Loan?

If you don’t have a salary account at the existing lender and the EMI is getting deducted from some other bank account, the concerned lender will ask you to submit income documents. Since you could shift your residence from the time you applied for the loan, the lender can ask you to submit the documents authenticating your new residence.

Do You Need to Submit Documents When Getting a Top-up on Personal Loan Balance Transfer?

Yes, you need to! Let’s be told briefly that a balance transfer means the transfer of outstanding loan balance from one lender to another at a lower rate of interest, helping you reduce your interest outgo. A personal loan balance transfer will be like a new loan for the lender where you are switching your existing loan. Since it’s a new loan, the new lender will do all the verifications that your existing lender must have done before sanctioning you a personal loan .

Verifications That the Existing Lender Will Do When You Apply for a Top-up on the Running Personal Loan Amount

The existing lender will check your credit score and repayment track. Then, it will check whether you can pay the increased EMI owing to the top-up loan. If so, it will have no problem in sanctioning you a top-up personal loan. In some cases, you can get a pre-approved top-up loan offer based on your income and credit score. You will get intimated via an email, SMS or a phone call. In case you haven’t got such an offer, you should ask your existing lender about the same. If it finds you eligible for the same, it can let you apply for a top-up personal loan.

Verifications That the New Lender Will Do When You Apply for a Top-up on the Transferred Personal Loan Balance Amount

When it comes to getting a top-up on the personal loan balance transfer, the new lender will pull your credit report to check your credit score. Since it’s an unsecured loan, the lender would want a credit score of at least 700. Besides score, it will also look at your repayment track closely. Spots of loan payment delays can make the new lender reject the personal loan balance transfer. With that, you nullify the scope for getting a top-up amount. If you have a flawless repayment track, the lender will check your income to assess whether you can handle the increased EMI amount with the top-up personal loan in place. It will also check whether you have other loans too. The new lender will like to make sure the proposed EMI on the top-up personal loan and other obligations, if any, do not constitute more than 50% of your net monthly income. The percentage you see could vary based on the income levels of the customer. Someone earning high can be allowed a higher percentage too. But those earning less will need to have debt obligations constituting much less of their income.

Documents to Submit When Doing a Personal Loan Balance Transfer and Getting a Top-up on it

Here’s a list of documents you need to submit when applying for a top-up on the transferred personal loan balance amount.

• Identity Proof – PAN Card (Mandatory)/Aadhaar Card/Voter ID/Driving License/Passport
• Residence Proof – Aadhaar Card/Voter ID/Driving License/Passport
• Income Proof
  • Last 3 Months Salary Slips, Form 16 (Salaried)
  • Income Tax Return (ITR), Profit & Loss Account Statement and Audited Balance Sheet for the last 2-3 Years
• Bank Statement for the last 6 Months
• Latest Passport Size Photographs

Note – Income documents and bank statements mentioned here will be asked by the existing lender too when you apply for a top-up there and don’t have a salary or business account there.