Instant personal loans play an integral role in bridging the gap between people and their immediate need for cash.
Many banking and non-banking financial companies offer digital loans that are convenient, hassle-free and require no documentation.
All you have to do is submit basic information like your name, monthly income, and PAN to apply for a loan.
According to the regulatory practices of the RBI, it is mandatory for you to submit your PAN. This allows the lender to assess your credit profile, determine your credit worthiness and give you an appropriate loan offer.
However, there are a few NBFCs that offer personal loans without a PAN. They ask for other alternatives like bank statement, Aadhaar card and permanent address proof.
But is it a good idea to take personal loans without a PAN card? Here are the pros and cons.
1) Flexibility for non-PAN holders
If you don’t have a PAN card or are a student who urgently needs money, then such lenders can help you out. The absence of your PAN won’t stop you from getting instant access to the money you need.
1) It could be a Chinese loan app
If your lender is giving you a personal loan without PAN, then there is a possibility that it could be a Chinese loan app and it’s best to avoid it.
Chinese loan apps are fraudulent apps that target low-income groups and offer low-ticket loans at a very high interest rate.
Such lenders don’t follow any regulatory guidelines of the RBI, engage in abusive practices for quick recovery and misuse your personal information to threaten you.
2) You might end up paying a very high interest rate.
If you are getting loan without PAN, then you could be seen as a high-risk borrower. This might increase the chances of you getting a loan at a higher interest rate and processing fee.
3) Your lender won’t be able to report any of your loan activity to the credit bureau.
Your PAN card is linked to the credit bureau that helps you create a repayment history.
This means if you take a personal loan without PAN and repay all your EMIs on time, it won’t reflect on your credit profile.
This way you won’t be able to improve your credit score and face a lot of difficulty in creating a credit history.
Yes, personal loans without PAN seem like a convenient option when you don’t have the documents you need, but it is more important to take loans from a secure and credible lender.
Make sure you take personal loans from a genuine Fintech platform like Zype.