Your Income Tax Return (ITR) form is an important document that performs several functions. First and foremost, it shows your income and the taxes you’ve paid to the government. When applying for a loan, your ITR is one of the most crucial papers that a lender may require to better understand your income.
If you are a salaried employee with an income that falls below the taxable limit, you will receive an ITR. If you are a non-salaried individual with income below the taxable limit, you may find it difficult to get documentation like an ITR. As a result, applying for a loan may become more complicated. However, there are a variety of options that you might consider.
Offer Alternative Income Proofs
Lenders will often request a variety of documents, including your ITR, to assess your financial soundness. If you do not have an ITR, you can provide additional documentation to the lender to demonstrate your financial stability and acquire the loan.
Co-Apply for the Loan
If you do not have an ITR, you should try applying for the loan with a co-applicant who does. Lenders would then analyze the applicant’s and co-applicants’ combined income, which might assist enhance your total loan eligibility and increase your chances of obtaining a larger loan.
Adding a co-applicant might also help you close gaps in your loan application. Individuals without a regular wage may benefit from having a co-applicant to improve their financial stability and establish the lender’s belief in their capacity to repay the loan. A co-applicant so helps to depict you as a low-risk borrower capable of servicing the loan by the terms of the agreement.
Opt For A Gold Loan
Gold loans are secured loans in which borrowers pledge their gold jewellery or ornaments as collateral to get a loan for a specific sum. In this situation, the lender’s risk is reduced by focusing on the collateral. However, lenders may seek your ITR if you are looking for a loan of more than Rs.25 lakh.
In the case of gold loans, lenders primarily consider the value and purity of the gold pledged. They may also seek basic documentation, such as confirmation of identification and residence, for verification. Before applying, inquire directly with the lender about their paperwork requirements, as loan conditions may differ between lenders.
Apply for a Personal Loan
Unsecured loans, such as personal loans, are simple to get and need no collateral. They frequently do not require substantial documentation. You can obtain a personal loan accepted depending on your income and KYC information.
However, because these loans are unsecured, some lenders may impose minimum income or credit score requirements. So, if you have a good credit score, a personal loan may be easier to get. If you have a good connection with your current bank, ask them about pre-approved loans that you may be eligible for.
Consider The Peer-To-Peer (P2P) Lending Platforms
Peer-to-peer (P2P) lending is becoming increasingly popular in India, allowing people to borrow money without the need for documentation such as an ITR. P2P lending connects individual borrowers (individuals or small businesses) with investors via Internet platforms or peer-to-peer lending websites. Remember to only borrow from RBI-registered investors and thoroughly consider the loan terms and circumstances before committing.
Opt For A Smaller Loan Amount
If you need a loan but don’t have an ITR, apply for a lesser loan. Lenders sometimes issue loans for modest sums without substantial paperwork. Furthermore, smaller loans are easier to repay and typically approved faster.
When you need money, timing is important. The choices listed above are some ways you might pursue to gain access to finances. However, regardless of your income, you should always file your income tax returns to ensure tax compliance.
