Introduction
In our previous piece, we discussed about pre-approved personal loans and how ‘pre-approved’ does not guarantee a loan approval. Today, we will talk about the process between the ‘pre-approved’ and ‘approved’/’rejected’ stages. You must be wondering what happens to all those applicants who seek a personal loan from Loan Singh’s digital lending platform. Being a premier digital lending solution for under-served salaried professionals, Loan Singh prides on its thorough and impartial underwriting process to chaff out the truly deserved applicants, and provides them with quick personal loans. But what does underwriting mean in general? Does it hamper or assist your personal loan application? Does the process differ between banks & Loan Singh? Before your loan application gets to the loan underwriting phase, it has to be pre-approved first. The pre-approved phase determines if you are eligible for a personal loan in the first place, or not.
Pre-approved personal loan
With Loan Singh, your personal loan application is pre-approved only when you complete the ‘Get Started’ process. Your loan pre-approval signals that you are eligible to be considered for the personal loan. The next phase, i.e. underwriting, begins only when you provide PDFs of your latest 6 months bank statement.
Personal loan underwriting
Now coming to your personal loan underwriting, it is a process wherein Loan Singh analyzes the information provided by each applicant. The data & financial information are verified, analyzed and summarized to paint an image of your credit worthiness. You can call underwriting as a credit analysis that precedes the loan approval.
Underwriting is not only done for individual credit purposes, but also towards commercial or business entities. The evaluation here consists of financial information provided by small businesses – including analysis of their balance sheet, tangible net worth, ratio of debt to worth and possible liquidity. The output here is preparation of an income statement highlighting revenue trends, gross margin, profitability, debt service coverage and all that jazz. Underwriting also features in other domains such as corporate bonds, commercial paper, government securities, resale to investors, etc.
Coming back to Loan Singh, the underwriting is carried out under the vigilant eyes of a capable review team. They are tasked with reviewing each and every piece of financial information pertaining to the thousands of applicants we receive daily. They look at how prompt each borrower has been with his/her credit responsibilities. Approval is only possible if the applicant can demonstrate successful loan repayments on time.
Underwriting Inputs
To get the underwriting done successfully, we would need certain details to get the underwriting algorithm provide us with an accurate loan approval result. We will only be able to serve you better if you tell us honestly and clearly who you are, where you live and how much you earn. We have prepared a neat and simple form for you to fill. Through this form, we expect you to give us the following information
Get Started page – Select ‘PERSONAL LOAN’ from the dropdown, and enter the loan amount with the desired repayment tenure.
Registration page – Add your contact number, personal email ID and corporate email ID
Social Authorization – Connect your Facebook, Google+ and LinkedIn profiles – for discounted rates
Profile Page – Fill in your name, gender, father’s name, number of dependents and PAN Details. We use your PAN Card Number to check your credit score, and as a KYC document.
Address Page – Choose your type of residence; mention your street address, city, state and pin code.
Job Profile Page – Mention your current designation, total work experience, company name, highest qualification, last institution attended and monthly salary.
Financials page – Upload your latest 6 months bank statement either from your computer, GMail account or net-banking account directly. Make sure the file is in PDF format.
Auto Debit Page – Provide permissions to your bank name, account number and IFSC code so that Loan Singh can auto debit the loan EMI amount from your account every month. This way you don’t need to set reminders or miss out on any loan EMI repayments.
The criteria to be personal loan eligible are
Have the right age
Be at least 21 years of age, and of Indian nationality.
You have to be salaried
Be a working professional with a minimum monthly salary of Rs.15,000
Good credit history
You should have a good credit history, a good credit utilization ratio and a balanced credit mix. In case of no credit history, you must at least be salaried for the last 3 months.
Provide your financials
The latest 6 months bank statement in PDF along with PAN Details. Remember to provide the bank statement in the PDF format only. If not, then like a spanner thrown in the works, the algorithm won’t be able to give us the desired output. The bank statement shows us your regular salary credits, your transactional history, repayments done towards any form of credit, any recent unpaid transactions, high cost credit usage if any, spending habits and responsible credit limit usage.
Underwriting Process
The above details go into a credit evaluation algorithm (Loan Singh’s Proprietary) that uses electronic identification procedures to verify your identity. The program helps identify any fraudulent tampering with the bank statement. Your credit bureau report, tells us about any hard inquiries pulled-up against your name along with your repayment history with other credit institutions. This is why the bank statement you upload has to be in PDF format only. Everything is done digitally – with no human interaction. This removes the possibility of impartial tampering at our end.
The algorithm then calculates your credit worthiness based on all the information that goes into it. As a responsible lending solution, Loan Singh tries to find the best loan amount for you keeping in mind your regular spending habits.
Underwriting Output
Based on a proper underwriting process, one of 3 outcomes are possible.
Personal Loan Approved
Your personal loan is approved if your repayment history, income and credit score are all favorable to the underwriting program.
Personal Loan Rejected
At the other end of the spectrum, poor credit score, inconsistent or abysmal repayment history, too many debt consolidations, etc. give us no choice but to reject your personal loan application. With no collateral for availing a personal loan, your credit history is the most important factor that can get your loan approved.
Incomplete or Fraud
In case any fraud or misleading information is detected, the application will be outright rejected. In case there is incomplete information provided by the borrower due to latency or ignorance, our operations team makes efforts to contact the borrower to find out why the application is incomplete.