What is a Personal Loan Sanction Letter

A loan is an easy way to access funds for both strategic and unexpected needs. However, disbursing the loan amount to your bank account involves many steps. One among them is getting your personal loan sanction letter from the lender. 

Read on to know more about this letter and how you can get it.

Meaning of Sanction Letter for Personal Loan

This letter plays an important role in the loan application process, whether you have applied for a personal loan or another type of loan. Here are all the key features of it: 

• Lenders send it as a sign of initial approval of your loan application
• It offers you important information related to the terms of your personal loan offer.
• Do not mistake this letter for the loan agreement; instead, it is the first step towards loan disbursal 
• You can read it to check the loan offer and other relevant details of the loan, such as the interest rate, EMI and tenure
• This letter helps you get a snapshot of the loan amount you can expect 
• It gives you the time to get back to your lender in case you have doubts or want to negotiate on any terms
• In general, you get up to six months to review the terms in this letter and accept the offer

After this process, the lender will verify your documents and do other checks to ensure you can repay the loan. Once this is done, you will receive the loan agreement. On signing it, you can expect to receive the loan amount.

Steps to Get a Loan Sanction Letter

Here are the main steps to getting a personal loan sanction letter.

• Meet the lender’s eligibility criteria
• Apply by filling out the application form
• Submit documents required by the lender

Once this process is complete, the lender authenticates the application and if it is approved, sends you this letter as the next step.

Documents Required for Personal Loan Sanction Letter

To request a loan sanction letter, you need to provide the following documents at the time of application. 

• Loan application 
• Government-issued ID cards such as Aadhaar card 
• Address proof such as voter ID, utility bills or rental agreement
• Income proof, including bank statement or ITR
• Employment letter 
• Credit report

Loan Sanction Letter Format

Though every lender has a slightly different loan sanction letter format, here is what most of them contain:

• Application or reference number for your personal loan application
• The type of loan being offered
• The loan amount being sanctioned
• The personal loan interest rate and the base rate it is calculated on
• The type of rate, fixed or floating
• The loan’s repayment duration
• The EMI you will pay
• The processing fee and all other charges 
• EMI bounce charges
• Your name, address and other personal details

Now that you understand a loan sanction letter better, you can prepare yourself to boost your eligibility and do your homework before you apply. When it comes to the Fibe Instant Personal Loan, we make the process simple. 

You can apply for an instant loan online by submitting minimal documents to up to ₹5 lakhs. Simply download our Personal Loan App and apply online in minutes!

FAQs on Sanction Letters for Personal Loans

What happens after the loan sanction letter?

Once you get the sanction letter for a personal loan, you have time to read and accept the offer. After you do, lenders disburse the loan amount in your bank account.

How long is a personal loan sanction letter valid?

Usually, a sanction letter for a personal loan is valid for up to 6 months.

Can a loan get rejected after a sanction letter?

Yes, there are cases when a loan may get cancelled after the sanction letter is issued by the lender. This may happen if there are issues with verifying documents or if you choose to cancel the loan.

What is the importance of a loan sanction letter?

This letter is important as it gives you all the important information related to the personal loan. This includes interest rate, tenure, EMIs, fees and charges as well as the approved loan amount. This letter signals the first step of approval from the lender and comes before the amount is disbursed.

How do I check my loan sanction status?

You can check your loan sanction status on the lender’s app or by logging in to the website and using your application number. You can also contact customer care.

What happens after submitting a loan sanction letter?

Once you get the letter, you can review the terms of your loan. If favourable, you can accept it or negotiate it.

How does a loan offer letter differ from a sanction letter?

A sanction letter is offered before the loan approval, which allows you to check the loan terms. After you accept the loan and the lender approves it, then you give you the offer letter.