Why Salaried Employees Have More Chances of Qualifying for Personal Loans?
Personal Loans
A personal loan is a flexible, versatile, and easily accessible financial product available without collateral.
Whether you want funds for a car purchase, vacation planning, home improvement, sudden medical expenses or other financial requirements, you can apply for a personal loan to meet any planned/unplanned expenses.
Moreover, quick processing, adequate loan amount, simple documentation, and flexible loan terms make personal loans an effective way to get required funds timely.
Why Salaried Employees Qualify for Personal Loans Easily?
Lending institutions provide funds without collateral. Therefore, eying on various aspects concerning loan repayment from the borrower is imperative for them.
You can be self-employed or salaried, and personal loans can be taken from lending institutions and NBFCs without collateral with minimum documentation.
However, salaried employees have the edge over self-employed individuals in procuring personal loans considering a regular source of income.
A salaried individual earns a steady income. Therefore, lenders trust them to receive timely equated monthly installments (EMI).
A regular income source for salaried employees reduces the loan repayment default chances for the lending institution.
Hence, salaried personal loans are easily approved by lenders and individuals have a better chance of qualifying for personal loans than non-salaried persons.
They can get funds quicker than other applicants.
Besides this, various other factors affect an individual’s loan eligibility. Let us elaborate on the factors affecting personal loan eligibility and how to improve the chances for personal loan approval.
Key Factors Influencing Personal Loan Eligibility
- CIBIL Score
CIBIL score lies between 300 (lowest) and 900 (highest). It defines an individual’s creditworthiness. It is the most crucial factor that lenders evaluate while scrutinizing your loan application.
Your credit score indicates how well you have treated your previous debts and have paid them timely or not.
Maintaining a high credit score makes obtaining a personal loan easier. Maintain a fair score of 750+ to enjoy a personal loan at minimum interest rates.
- Current Employer
The employer an individual is working with has a significant impact on their Personal Loan application.
Your employer’s reputation is taken into consideration by lenders to evaluate your loan eligibility.
They check the employer’s stability in the market while checking your loan repayment ability.
- Work Experience
Lenders prefer an applicant that has worked with an organization consistently. Generally, lenders consider approving a loan application with a total work experience of one year and experience of six months in the current company.
- Outstanding Debts
Lending institutions check your financial obligations and outstanding debts.
If there are many pending outstanding bills, it makes the lender skeptical about your loan repayment. As a result, they may accept or reject your loan application.
How To Increase Your Chances to Qualify for a Personal Loan?
- Maintain a sound relationship with your existing lenders
A good relationship with the existing lender will help salaried employees to enjoy a lower interest rate on personal loans.
An individual should first consider their existing lenders and inquire about their loans.
The existing customer relationships can help you get personal loans at more favorable terms.
- Avoid Frequent Job Change
Employment stability and history are also parameters for evaluating your personal loan eligibility. Lending institutions check for the current job duration as well as the total work experience of the loan seeker.
Applications with a frequent job-switching record have lower chances for loan approval because it is regarded as an unstable career.
- Choose Suitable Loan Repayment Tenure
You must choose the loan tenure according to your repayment capability based on your income.
Individuals with low income looking for small EMIs can consider a longer loan tenure. However, it should not be unnecessarily long.
- Consider Pre-approved Personal Loan Offers
Your existing lending institution can offer pre-approved loans if you have repaid your previous debts timely and maintained a good relationship.
Pre-approved personal loans for salaried professionals are disbursed quickly as the lender has already checked their financial history.
- Avoid Multiple Loan Applications Simultaneously
Lenders fetch your credit report when you apply for a loan. It helps them evaluate your financial behavior toward your previous debts.
They come to know your creditworthiness. Lenders’ requests for credit reports are the hard inquiries for the credit bureaus that impacts your credit score.
If you send many loan applications within a short period, lenders may reject your loan application.
You should first compare and shortlist the most suitable loan offers as per your loan eligibility and then apply for a personal loan at the minimum interest rate.
Thus, a personal loan can be availed by salaried employees easily to overcome financial shortfalls that require immediate action.
You can apply online for a personal loan with renowned NBFCs and get the funds at an affordable interest rate, depending on your loan eligibility.
