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What is the step by step process of personal loan disbursal?

What is the step by step process of personal loan disbursal?

Increasing number of people are applying for a personal loan every year. It is because personal loans are easily available in the market and can be used for all kinds of expenses like wedding expenses, medical bill payments, big-ticket purchase, credit card bill payments and home renovation. Multiple lenders including banks and NBFCs (Non-Banking Financial Companies) offer a personal loan for financing several unplanned and urgent expenses. Some steps are taken to disburse a personal loan.  

Personal loan disbursal procedure

The process of a personal loan from application to disbursal is very simple, short and fast. The entire process of personal loan disbursal is divided into three steps including application, sanction and disbursement. 

Personal loan application

To get the loan, first of all, borrowers need to apply for a personal loan online or by visiting the nears bank branch. They need to submit a dully filled loan application form along with supporting documents. Their loan application is evaluated online within a couple of minutes or hours, depending on the lender. A lender looks at the personal loan, employment and financial information of the borrower. Such as identity proof, residential proof, income proof and employment proof. Pre-approved customers can get faster approval. 


If you meet the eligibility criteria and the lender finds the documents you have submitted to be correct and genuine, your loan is sanctioned. After that, you are sent a sanction letter with details about your personal loan. For example, if you apply for Canara Bank personal loan, the bank will send you a sanction that includes every detail about the loan viz. Canara Bank personal loan interest rates, loan amount, loan tenure, terms and conditions of the personal loan etc. 

Personal loan disbursement

Once you agree with the terms and conditions, the lender disburses the personal loan within a couple of hours. You may receive the loan through a cheque or demand draft. It is either couriered at your address or you can collect it from the bank branch. Multiple lenders transferred the loan amount into your bank account through NEFT. The loan amount disbursed can be lower than the amount you applied for. Following factors are considered for the loan amount:

  • Type of the loan

  • GST

  • Processing charges

  • Upfront payments (where applicable)

Confirmation from the lender

You will receive a confirmation email or letter at your correspondence address along with a welcome kit after disbursal of the loan amount. An EMI calendar, loan summary and repayment schedule and other important details of your personal loan are included in the kit. With the amortization table, you can easily understand the repayment schedule including the amount paid as the principal as well as interest. 

Individuals who have a banking relationship with the lender can get pre-approved instant personal loan offers without document submission and verification. Suppose, if you have a salary account with Canara Bank, you can get pre-approved Canara Bank personal loan offers. 

Personal loan repayment process

Now, you can start paying back the loan as per the terms and conditions agreed by you. A personal loan can be repaid through several options such as through Post-dated Cheque (PDC), Electronic Clearing Services (ECS) and NACH (National Automated Clearing House). 

Now personal loans are disbursed in a matter of minutes or hours, or within 2-3 working days. You must compare personal loans offered by multiple lenders like Canara Bank personal loan, HDFC Bank personal loan and other personal loans. Loan terms vary from lender to lender like Canara Bank personal loan interest rates are different from interest rates offered by other banks. Use a personal loan EMI calculator to figure out your monthly instalment beforehand.  

If you pay your EMIs on time, it will help you improve your credit score. 

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Joined: January 19th, 2020
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