If you want to apply for personal loan, it is crucial to understand that your job situation may significantly impact your eligibility. Banks assess your capacity to repay the loan by checking your employment status. This article will explore five employment statuses that may lead to loan rejection. Comprehending these aspects can facilitate informed decision-making and improve the likelihood of obtaining loan approval.
5 Employment Situations That May Affect Loan Approval
Don't you want to know why your loan applications are getting rejected even when you are employed? CIBIL score is not only the factor in rejecting your loan application. Apart from running a free CIBIL score check before you apply for personal loan, there are other factors to consider. The reasons given below might be why your loan application is getting rejected.
Banks consider employment security as a significant aspect when analysing a loan application. Switching jobs frequently can increase the likelihood of your loan application getting rejected. If your employment record shows frequent job switches every year or every other year, you could fall under the high-risk bracket. Even if you're serving your notice period with your previous employer, your loan application may only receive approval with a job offer. Job stability is an important factor for loan approval. Also, it would help if you run a free CIBIL score check before you apply for personal loan.
The likelihood of getting your loan application approved can be influenced by your employment situation and method of receiving payment. Being employed in a sole proprietorship and receiving payment in cash can pose difficulties in obtaining loan approval, despite having a substantial income. The absence of evidence for your monthly income may categorise you as a high-risk borrower, resulting in loan disapproval. You can avoid this by receiving your salary through cheques or online transfers to have proof of your income. Also, remember to run a free CIBIL score check before-in-hand.
Non-resident Indians (NRIs) earning well abroad could face obstacles in obtaining loan approval if they are engaged in a contractual job. Banks are cautious in evaluating income stability and job continuity abroad, posing difficulties for NRIs seeking loan approval. While loans for contract workers in India may be sanctioned based on their job profile and nature, the same may not hold for NRIs. Therefore, maintaining a steady job and income source is crucial for loan approval.
If you are employed in a job with a high level of risk, banks may perceive you as a high-risk candidate and might demand extra collateral for loan approval. It highlights the significance of maintaining a steady employment history, income, and a loan protection plan. Consider switching to a less hazardous occupation or purchasing a loan protection plan to enhance the likelihood of loan approval.
Limited work experience can be challenging to get loan approval, as most banks favour candidates with a consistent employment history. It's crucial to possess a minimum of one year of work experience as a full-time employee in a renowned organisation before you apply for personal loan.
Therefore, rather than risking rejection, assess your loan eligibility and build your work experience to increase your chances of loan approval. Also, your job status can significantly impact your professional growth and financial security. Remember to run a free CIBIL score check before applying for a personal loan.
Conclusion
In conclusion, factors like job stability, employer reputation, mode of salary payment, work experience, and job risk level can affect your loan application. Even though CIBIL score and income are crucial for personal loan approval, it is essential to consider the factors mentioned in this article before you apply for personal loan, apart from running a free CIBIL score check.
