If you are applying for a loan in any bank or financial institution, lending institutions usually have a checklist of documents to be collected from you for calculating viability of your loan application. Income tax Return of past 2 to 3 years is one of the most important documents required by lending institution. Income Tax Returns acts as a legal proof of your income in the eyes of banks. You will have no problem if you file ITR regularly, but what if you have not filed them recently in the past. This is especially true for self employed section of applicants. Would banks reject your application for loan. To answer your query, LoanKuber has prepared set of points to guide you in getting a loan even if you don’t have a ITR.
- Show your clear income source to credit officer – Usually a credit officer visits your premise/office/factory etc to discuss and analyze your case before disbursal. It is very important to discuss your business model with him. You should give all the information required like business vintage, list of debtors/creditors, trade payables and trade receivables of past 1 year. It is very important for you to show your business premise, equipments used, staff in the organization etc. He can ask for your current inventory level, purchase list, seller list etc to at the time of personal discussion. It is very important to show a true picture of your business especially in the case of no ITR. All this information would then be analyzed to conclude your annual income and repayment capacity.
- Genuine justification – You should have genuine justification for not maintaining ITR. Moreover, you should avoid filling ITR of previous years on the same date. If you don’t have an ITR, you can always consult a professional like CA to fill your current year ITR at least.
- Good CIBIL record – It is always important to maintain a good CIBIL record and more so in case of no ITR. A CIBIL score of greater than 750 or 800 will provide some leverage for banks to go ahead with your application. Hence, it is very important to pay your existing EMIs on time.
- Maintain good banking habits – Ideally, your average bank account size should be twice of your proposed EMI for the loan. If lending institution observes good banking habits with optimal average bank balance then, chances of getting your loan sanctioned are increased.
- Seek lower LTV (Loan to value) – LTV denotes how much of the proposed loan value a bank can lend to a borrower. A 85% LTV indicates that the buyer will have to shell out only 15% of the proposed loan value and the rest can be financed through banks. If you don’t have an ITR then, you can seek lower LTV from lending institutions which will make your application more creditworthy.
- Seek certain HFCs that offer loans to individuals with no ITR –There are certain lending institutions like Religare Housing, Shubham Housing Finance etc which provide loan to the individuals having no ITR on case to case basis. They would also look into all the points mentioned in this article. However, they ask for higher interest rates on the loan repayment.
- Additional Co–Applicant – You should always add additional credit worthy co-applicant in case of no ITR. A good co-applicant will give an additional assurance to a lending institution.
- Peer to Peer lending – P2P Lending is a form of crowd-funding used to raise loans which are paid back with interest. Interest rates on P2P platforms are linked to the risk profile of the borrower. It is a new concept in India but gaining attraction pretty fast. These institutions like LoanKuber use tools like social profiling, payment modeling and data analytics etc to lend to a customer. You can always reach out to them if you don’t have an ITR.
Indian financial market is a rapidly evolving market and there are always options for all categories of customers. New age institutions like LoanKuber can help you in getting your dream fulfilled of getting a loan in case you don’t have an ITR.