Can You Really Get a Loan Using Only an Aadhaar Card: Pros & Cons

Many people want to fulfil their financial needs with quick, instant cash loans that require minimal documentation. The Aadhar Card has made many things feasible. Hence, the question may arise whether it is really possible to get a personal loan with only an Aadhar Card.

Aadhar Card is widely used by NBFCs and banks for loan verification. Aadhar-based EKYC has made the online loan process very smooth. But is the Aadhar Card enough for NBFCs and banks to process the loan? Through this blog, we will understand this.

Is an Aadhar Card Alone Enough for a Loan?

Aadhar Card is widely accepted by banks and NBFCs as an identity proof. The Aadhar-based EKYC process helps banks and NBFCS verify your details, which makes the loan journey quite smoother. But Aadhar itself is not enough to get you a personal loan.

Aadhar may work as a primary document for financial institutions, but along with Aadhar, you also have to provide a few basic documents to confirm your identity, address and repayment capacity. This is the reason why the majority of lenders ask for 2-3 documents along with Aadhar for loan processing.

What is a Aadhar based Loan?

When you apply for a personal loan using Aadhar card, your Aadhar card becomes a primary document for verification. This helps the lender to verify your details with the EKYC process. Hence, this makes the loan approval faster and gives a seamless borrowing experience.

However, along with Aadhar, you also have to submit a few basic documents. You can apply for these instant cash loans through your smartphone or laptop. The entire process will be completed within a few minutes.

Documents Required Along with Aadhar Card

As discussed above, along with Aadhar, you also require a few basic documents for processing the loan application. Here is the list of the documents required: -

• Aadhar Card is the primary document required for identity and EKYC verification.
• Pan Card is needed for financial verification and to check the credit history.
• A passport-size photograph or Selfie is required for identity match and KYC purposes.
• Income Proof like salary slips and bank statements are needed to check the repayment capacity of the borrower.
• Basic Personal Details are required to complete the loan application process.

Eligibility Criteria for Aadhar-Based Loans

Borrowers have to fulfil the following basic criteria to avail a loan on an Aadhar Card: -

• Age has to be between 21 years and 60 years.
• Should have an in-hand salary of ₹20,000.
• Income should be directly credited to their bank account.
• A credit score of 700+ is required.

Pros of Getting a Loan Using an Aadhar Card

• Speed and Convenience

One of the major advantages of getting a loan on an Aadhar Card is the speed and convenience. These loans use Aadhar based EKYC process. Hence, your identity is verified in minutes. Hence, you are able to get a personal loan faster than the traditional process.

• Minimal Documentation

This loan process requires minimal documentation. Borrowers don’t need to submit physical documents. Aadhar simplifies identity verification, which reduces paperwork.

• Easily Accessible

Aadhar-based loans are easily accessible. Even first-time borrowers with limited credit history can get a small personal loan. Digital lenders use alternative data to assess creditworthiness in Aadhar loans.

• Quick Disbursal

This is the topmost benefit of Aadhar loans. Once the loan is approved, it is credited to the borrower’s account within a few hours. Due to this, Aadhar based instant cash loans are ideal for short-term finance needs.

Cons and Risks of Aadhar Card Loans

Aadhar-based loans come with several risks and limitations which borrowers must understand before applying: -

• High Interest Rate

One of the major concerns in these loans is the high-interest rate. These loans are often short-term and unsecured. Hence, lenders charge high interest on these loans.

• Short Repayment Tenure

Another big risk is short repayment tenure. Majorly, Aadhar-based loans have a short repayment tenure. This can pressurise borrowers and can also increase the chances of missing EMI Payments.

• Data Privacy and Security

Data privacy and security are serious concerns. Your Aadhar details can be misused, which leads to identity theft or unauthorised access to personal information.

• Hidden Charges

At times, there are hidden charges attached to these loans in the form of processing fees, late payment penalties, GST, etc., which is not clearly specified. Borrowers come to know about this only after the loan is disbursed.

• Over-Borrowing

As these loans are easily available, there are chances of over-borrowing. Quick approvals may encourage repeated borrowing, which can make you fall into a debt trap.

Conclusion

Digital lending has made Aadhaar-based loans quite popular. Aadhar is the primary document required for these loans. But along with the Aadhar Card, you also have to provide a few basic documents. Only Aadhar alone won’t be enough. Other documents required include income proof, address proof, PAN card, photograph, etc.

These Aadhar loans are easily accessible. It’s ideal during times of emergency as they are approved very quickly. These loans also come with certain cons and risks. These loans are unsecured, so they have high interest rates. It generally has a short repayment tenure and at times carries hidden charges.

You can apply for this personal loan through a smartphone or a laptop. The majority of lenders offer these loans through an app or website. Go to their app/website and complete the application process to get a loan.