There are a variety of reasons why individuals obtain personal loans. Among these reasons may be managing unexpected expenses, such as medical bills, or fulfilling one’s personal and professional goals, such as financing a dream vacation, wedding arrangements, higher education, and more. However, many individuals have questions about how to get a personal loan for salaried employees?
Several lenders have specific pre-approved offers for personal loan for salaried persons. Pre-approved loans are not available to everyone because they depend on the relationship with the lender, and not all of these offers are suitable for each individual. There are several ways individuals in employment can qualify for a quick personal loan for salaried employees without experiencing any hassles.
Eligibility Criteria for Personal Loan for Salaried Employees
It is essential to first check whether you meet the lender’s minimum income requirements if you earn a relatively low income. It is important to remember that banks and financial institutions will only consider your application if your income and repayment capacity meet their criteria. In addition, it is essential to verify that you meet the other requirements specified by the lender, which include:
- A borrower should be at least 21 years old and no older than 60 years old
- It is recommended that the applicant has at least two years of professional experience
- At least one year of service with the applicant’s current employer is required
- Documentation required for a personal loan application
- Completed application form
- Identity proof: You may submit a copy of your passport, driver’s license, Aadhaar card, or voter identification card as proof of your identity
- Proof of residence: You may submit a copy of your passport, Aadhaar card, driving license, or voter ID card as proof of residence
- Statements of bank account for the past three months
- Salary slips with Form 16 for the most recent pay period
- Age verification
- Passport-sized photos taken recently
- Verification of signatures
5 Tips to Qualify for Personal Loan for Salaried Employees
1. Maintaining a high credit score
The credit score plays an essential role in determining whether your loan application will be approved. A credit score is calculated by considering a borrower’s repayment history, credit utilization, and debt-to-income ratio. For borrowers who have been diligent in repaying their past loans, their applications will be approved more quickly, and they can get instant personal loans for salaried.
Generally, a credit score ranges from 300 to 900. However, lenders usually accept personal loan applications with a CIBIL score of at least 750.
There are several ways in which borrowers can improve their credit scores –
- Before requesting a new loan, repay all your previous loans. Repaying your debts on time will reflect positively on your credit score.
- Pay the entire amount rather than paying only the minimum amount due on your credit card bill or existing loan EMI. Therefore, you will be able to avoid accumulating a mountain of debt due to interest accrued on the outstanding amount.
- Ensure that you do not exceed 30%-40% of your credit limit.
2. Stability and reputation of the employer
In the case of service professionals seeking unsecured loans, lenders consider their employment stability when evaluating their loan applications. Therefore, several factors are taken into consideration when approving a loan, including the employer’s reputation and the total number of years of employment.
Individuals who have good jobs and are employed by reputable firms are frequently provided with the low personal loan interest rates for a salaried employees. Their reputation has a direct effect on the interest rate they receive. Lenders view borrowers in high-level positions with reputable organizations as creditworthy, well-educated candidates who are unlikely to lose their jobs at any given time. HDFC personal loan for a salaried persons is a great example for those who are employed long-term in good positions. Thus, their EMI payments are unlikely to be delinquent.
If an unclassified company employs you, you may find that most lenders reject your loan application. Individuals working for unclassified companies may find it hard to get personal loan for salaried employees; however, they can still obtain loans from P2P and Fintech platforms. The only disadvantage being that the interest rates are typically very high.
3. Be careful not to apply for more than one loan at the same time
During the application process for personal loan for low salaried employee, the lender contacts a credit bureau and enquires about your default risk. This procedure is known as a hard inquiry. These inquiries appear on your credit report as well. A borrower with multiple loan applications recorded on their credit report cuts a sorry figure in the eyes of lenders. Financial institutions are hesitant to lend to them because they appear to be credit hungry.
A borrower who has multiple loan applications listed on their credit report is considered high-risk. Therefore, the lender is more likely to reject the loan application of such a borrower. To this end, it is an excellent practice to examine all options before applying for a loan carefully.
For example, before applying for a personal loan for salaried employees, borrowers may want to use a loan eligibility calculator to estimate the maximum amount they may be eligible for and review the lender’s eligibility criteria. Therefore, they will be able to apply for a loan that is ideally suited to their individual needs.
4. Decrease the ratio of your debt to your income
Are you considering applying for a personal loan? By reducing their debt-to-income ratio, intelligent borrowers are preparing to apply for a new loan. If you have any outstanding debts on your credit card or pending debts, you can reduce your debt-to-income ratio by paying them off. An individual who has a high debt-to-income ratio appears to be credit-hungry. They are reluctant to lend money to such borrowers since they are considered high-risk clients. Do not apply for a new loan if your monthly repayment obligations exceed that amount.
5. Include All your Sources of Income
In deciding whether to approve a personal loan for salaried employees, lenders prioritize the applicant’s ability to repay the principal and interest on time. In the case of a personal loan application, make sure you include all your sources of income and your regular salary. In addition, have your part-time earnings as well as your rental income. By doing so, the lender will see that you earn enough to repay the debt.
Factors to Consider When Borrowing a Personal Loan for Salaried Employees
- Eligibility Criteria
It becomes more necessary for you to compare the eligibility requirements of different lenders before applying for a personal loan for salaried employees if you earn a relatively low income. By doing so, you will reduce the likelihood of your personal loan application being rejected.
- Interest Rate
To determine the cost of your loan, you need to know the interest rate charged by the lender. As a result of being charged a high-interest rate, your total interest outgo over the loan term will be more significant, leading to a higher loan payment. Therefore, it is highly recommended that you compare the interest rates charged by different lenders before choosing a lender to apply with.
Comparison of best personal loan offers for salaried can be accomplished by visiting the official websites of the banks and financial institutions or by visiting a third-party comparison website that provides financial services.
- Assess the Other Charges
It is essential to include the other charges imposed by the lender when calculating the total cost of the loan.
- Check the Payable EMI
Upon taking out a personal loan from a lender, you will be required to pay the lender the specified EMI every month. If you miss even one EMI payment, your credit score will be affected, and you will have difficulty obtaining loans in the future. Hence, it is essential to use an EMI calculator to check the EMI payable.
- Check Your Credit Score
Make sure you check your credit score before applying for a personal loan for salaried employees. It is advisable to maintain a credit rating of over 700 if you wish to obtain a low-interest rate on a loan.
Post-COVID-19, several lenders have slashed the interest rate on personal loans to help eligible customers avail of loans at reasonable rates. It’s advisable to assess your financial condition thoroughly before applying for a personal loan for salaried employees. This can give you a lot of clarity on how much amount you need to borrow and maintain your monthly commitments without burdening yourself.