How to Apply for a Personal Loan on Salary if You Receive Cash?

Personal Loan on Salary

As per section 40A (3), an employer can pay salary to their employees in cash if the expenditure is less than Rs. 20,000. Many salaried individuals in India still receive a salary in cash. 

Directly receiving cash has some benefits. For instance, you don’t need to go to an ATM to withdraw money. However, when your employer gives you a salary in cash, they may not provide you with a salary slip. Since most low income personal loan lenders require a salary slip to approve your loan application, it may seem impossible to get a personal loan on salary if you get your salary in cash.

Fortunately, that’s not the case. Many lenders offer personal loans to individuals who receive a salary in cash. Here are some ways to apply for a personal loan if you receive a salary in cash.

Provide Your Bank Statements

If you receive cash from your employer, you may deposit it in your bank account every month. These transactions are recorded in your bank statement. Hence, you can produce a bank statement to prove that you’ve been receiving a salary regularly. 

Most lenders will ask you to provide bank statements for the last three months. So, ensure that you deposit your entire salary in your bank account on the same day each month. This way, you’ll be able to prove that you receive a fixed salary every month. 

Get It in Writing from Your Employer

A salary slip is essentially proof that your employer pays your salary. You can produce alternative proof, like a letter from your employer confirming that they give you a salary every month. The letter should clearly mention how many months you have been working with the employer and the monthly compensation you get. 

The letter should also mention the date of salary transfer, so you can show it along with your bank statement to build your case. Also, the letter should include your employer’s name and signature. 

Offer Letter and Salary Vouchers

If you receive a salary in cash, your employer probably wants you to sign a salary voucher every month. Request a copy of that voucher to show that you have a regular job and stable income. To support your salary vouchers, you can also give your offer letter that mentions your salary. Though an offer letter as a standalone document doesn’t prove your regular income, providing it as a supporting document with salary vouchers can be helpful.

Income Tax Returns

If you pay your taxes regularly, you can provide your income tax returns as income proof to the lender. There are three income tax return forms for salaried individuals:

  • ITR-1: Salaried employees with a total income up to Rs. 50 lakh, along with agriculture income up to Rs. 5,000, should fill ITR-1. Also, you shouldn’t have more than one house property.
  • ITR-2: Salaried employees with a total income exceeding Rs. 50 lakh, or people generating income from capital gains, should fill ITR-2. However, your profits or gains shouldn’t come from business or profession.
  • ITR-3: Salaried employees, self-employed professionals, and people receiving capital gains or profits from businesses should file ITR-3. 

Regardless of the ITR return you fill, you can use it as proof of income.

Wrap Up

Salaried individuals who get a salary as cash can also get personal loans for salaried employees. However, if your employer doesn’t provide salary slips, you could face some hurdles in getting a loan. To build your case, provide all the income proofs you have, including bank statements, ITR returns, and a confirmation letter from your employer. Lastly, you can always get cash loans online from leading NBFCs like Fullerton India at competitive interest rates and flexible repayment tenure. 

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