The Permanent Account Number (PAN) is a 10-digit alphanumeric identification issued by the Income Tax Department and is an important document for all financial transactions by the PAN holder. Banks and financial institutions mandatorily ask for PAN card details when you apply for loans or credit cards, make high-value transactions, open a demat account, etc.
While having a PAN card is an eligibility criterion for getting a personal loan, it is not mandatory in certain cases. Although submitting your PAN card details makes the loan application and approval process smoother, you can still get a personal loan without a PAN card.
In this blog, we will discuss the process and requirements for getting a personal loan without a PAN card.
Is a PAN Card Mandatory for Personal Loans?
A PAN card is not strictly mandatory for obtaining a personal loan, but it is generally required by most financial institutions. The PAN card serves as a unique identification number for financial transactions, helping lenders verify the applicant's identity and track their financial history. It plays a crucial role in assessing creditworthiness and ensuring tax compliance, which is why most lenders request it during the loan application process.
Banks and financial institutions require a PAN card primarily for two reasons:
- To verify your identity and check your credentials
- To report high-value transactions to comply with Know Your Customer (KYC) norms prescribed by the Reserve Bank of India (RBI)
You may be able to get an instant personal loan without a PAN card number if:
- The loan amount required is less than Rs 50,000
- You have an existing relationship with the financial institution
- Your income documents display repayment capacity
- Some lending companies provide loans without a PAN card but will require proof of your credibility to repay the loan. Also, it might impact the interest rates.
When you apply for a loan without a PAN, the lender must follow additional procedures to verify your identity before approving the loan.
How to Get a Personal Loan without a PAN Card
Getting a personal loan without submitting your PAN card details is possible. However, the process becomes longer and more tedious.
Some lenders may accept your loan application outright if you don’t have a PAN card. However, they will request alternate identity and address verification documents to process your application. Here are some alternatives to apply for a personal loan without a PAN card:
Choose the Right Lender
Look for small private lenders or fintech companies who are more flexible with their documentation requirements. Some of these lenders offer personal loans to customers who may not have a PAN card, especially in rural or semi-urban areas.
Provide Alternative Documentation
To compensate for the absence of a PAN card, be ready to submit other valid identification documents, such as an Aadhaar card, Voter ID, or passport. Additionally, you may need to provide proof of address, income statements, bank statements, and other financial documents to establish your creditworthiness.
Demonstrate Strong Repayment Ability
Lenders need assurance that you can repay the loan on time. Providing a stable income source, a solid credit history, or collateral can increase your chances of getting the loan approved without a PAN card.
Be Prepared for Additional Verification
Without a PAN card, lenders may carry out extra verification steps, like contacting your employer, asking for more references, or requiring a guarantor. Be prepared for these additional checks.
Negotiate with the Lender
If you have a good credit history or a long-standing relationship with the lender, you may be able to negotiate the terms and conditions to get a personal loan without a PAN card.
Conclusion
Getting a personal loan without a PAN is possible. However, it involves extensive paperwork and has limitations such as higher interest rates and lower loan amount sanctions. Maintaining a good credit score and banking relationship helps improve your case. Consider adding a guarantor for better eligibility. While having a PAN makes the process smoother, lack of it is not the end of the road. With the right approach, you can still get approved for a personal loan without a PAN.
