Documents That Act As Proof of Income When Taking a Loan
If you have plans to obtain a loan, one should make sure they have relevant documents that act as proof of income. Many people don’t understand the importance of having proof of income when applying for a loan, and in this guide, we are going to help you discover more about these documents and reasons why you should have them. Even online lenders who have set up websites require that you offer proof you are employed and in a position to repay the loan. Financial institutions demand documents that prove you have a source of income to be sure you will be able to repay the loan on time. This post will guide you on the most relevant document to have at hand when obtaining a loan.
The first document is pay stubs. If you are in urgent need of a loan and looking for a way to prove you have an income, make sure you present your pay stubs. A paystub is important and will always act as proof you are employed and depending on your income, one can be able to demand a higher loan limit. However, if you are not employed, this should not be a concern as there are other documents one can use to prove they have an income. If you are not employed and cannot provide pay stubs, one should have a bank statement. Lenders need proof that you are in a position to repay the loan, and a bank statement will provide this. Money that has been deposited in your account is reflected in your account, and this is visible in your bank statement. A comprehensive bank statement will show all transactions you have been executing in the past days or months, and this will offer the lender confidence you can rely upon. Bank statements are easy to obtain, and you only need to print it and provide it to the lender.
The other document one can present to prove they are employed is a letter from your employer. Look for a recommendation letter from your employer if you cannot get your hands on your pay stubs or a bank statement. Your employer will happily write you this letter on request, and once the letter is ready, one should present it to the lender and get the loan.
If you do not have a pay stub because you are employed, one can create documents that will act as proof they are employed. Before you make the document, one should talk to the lender to see what type of documents they accept.