When you start a new job, you have to deal with various expenses. You need money for house rent, travel expenses, professional grooming, and even emergencies, for which a personal loan can be of good help. However, getting a personal loan can be challenging for a new employee, especially a fresher.
Job instability, less income, and no credit history make them high-risk borrowers for banks and Non-Banking Financial Companies (NBFCs). In this blog, we will explore practical ways to improve the chances of getting a personal loan as a new employee.
Employment plays a big role in personal loan eligibility. Lenders (Banks and NBFCs) assess your employment before approving your personal loan. It helps them determine your financial stability, income reliability, and repayment capacity.
Lenders consider factors like income stability, credit history, and employer reputation to assess your personal loan eligibility. If you are a salaried employee working in a reputed organisation, you have higher chances of getting a loan approved.
An unstable job, on the other hand, will require you to produce additional documents like a letter from your employer, bank statements, etc, to qualify for a personal loan.
Individuals with a new job find it difficult to get a personal loan. Here are some main reasons behind it:
One of the major concerns lenders have with new employees is their limited duration with the present employer. The majority of financial institutions prefer borrowers with at least 6 months to 1 year with their current employer. This gives them confidence that the job and income of the borrower are stable. If you have recently joined a new company, lenders can see you as a risky borrower.
Employers have a probation period for new employees. This can be for some months. Till that you are not a permanent employee of the company. Hence, there is no job stability. This worries lenders about the loan repayment, and hence, they are not ready to offer a personal loan.
When you apply for a personal loan, lenders ask for recent salary slips and the last 6 months of bank statements reflecting salary credit for income verification. New employees may not have access to these documents. This makes it difficult for lenders to verify your income.
A new employee may not have a strong credit history. Specifically, those who are having their first job. With no credit track record, lenders are unable to assess their credit behaviour and financial habits. A limited credit profile with new employment makes it difficult for lenders to approve a loan.
A new job with existing obligations will make lenders cautious. Even if you have a good salary and you have some existing debt, the lender may reject your personal loan application. This is why you must always keep your debt-to-income (DTI) ratio below 50%.
Here are the tips that can improve your chances of loan approval:
A new job is a new milestone in your life. This milestone can be a big financial barrier to getting a personal loan. With limited tenure and income proof, lenders can be reluctant to offer loans to new employees. However, you can still improve your chances with a good credit score, stable income, and low DTI ratio.
At DMI Finance, we follow flexible eligibility criteria to ensure that personal loans are accessible to everyone, even for those with a new job. Apply for a personal loan with DMI Finance for all your financial needs.
1. Can a fresher apply for a personal loan?
Yes, a fresher can apply for a personal loan. You must, however, ensure that you meet the personal loan eligibility criteria of the lender.
2. Can new employees get fast loan approval?
It depends. Lenders usually ask for salary slips for 3-6 months to verify your income. Ensure that you show proof of stable income and employment, even if you have changed jobs recently.
3. What is the minimum tenure of employment expected by the lender for a personal loan?
The majority of banks and NBFCs expect that you have worked for at least one year with your present employer.
4. How do lenders verify a loan applicant’s income?
Lenders verify the loan applicant’s income through the salary slips and bank statements.
5. Does my previous job experience matter in getting a personal loan?
Not necessarily. Lenders always verify your eligibility and income based on your current employment. Your previous job experience will play a little role in personal loan approval.
6. Can I submit an appointment letter for employment proof?
No, an appointment letter is not accepted as employment proof by lenders.
7. Can a new employee apply for a personal loan without salary slips?
In case of the absence of salary slips, a new employee can submit a bank statement reflecting salary credit. Lenders do consider it for loan assessment purposes.
8. What is the minimum salary requirement to get a Personal loan?
You shall be earning at least ₹25,000 of salary per month to be eligible for a personal loan with DMI Finance.
9. Can a high credit score improve my personal loan eligibility even if I have a new job?
A strong credit score of 750+ can definitely favour you in getting a personal loan, even with a new job. It can compensate for shorter job tenure.
10. How does the debt-to-income (DTI) ratio impact my personal loan approval?
A low DTI ratio means your income can comfortably manage new loan EMIs. This is why it increases your loan approval chances.
| Personal Loan of Different Amounts | ||
| ₹50,000 Personal Loan | ₹1 lakh Personal Loan | ₹2 lakh Personal Loan |
| ₹3 lakh Personal Loan | ₹4 lakh Personal Loan | ₹5 lakh Personal Loan |
