5 Ways your Employer Rating Impacts Your Personal Loan Eligibility

Updated on: 19 Jan 2024 // 3 min read // Personal Loans
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Personal Loans are one of the easiest loans to get. All you need is a decent income from a regular source and an excellent credit rating. Banks do not even ask you the purpose of the loan. The documentation process is easy,and you get the money in your account within a few hours.

However, there is one drawback. The Personal Loan Interest Rates are higher than any other loan in the banking industry. It is because banks consider these loans to be the riskiest of all loans. There are ways to ensure you get a good deal on Personal Loan. If you have a high credit score in the range of more than 700, you can negotiate with your bank for a better deal. Similarly, the categorisation of your employer can also help you get a good deal. Let us see how it is possible.

Banks have various Personal Loan products for salaried and self-employed individuals. Most of the PSU banks have unique products for State and Central Government employees, PSU sector employees, and other top-rated corporate companies.

1. Segregation of Companies

Banks have segregated companies into different categories such as listed companies and non-listed companies. Depending on the company profile, the banks have further divided them into Super A, Cat A, Cat B, Cat C, Cat D, and so on. Some banks have classified companies as Diamond, Platinum, Gold, Silver, and so on. Employees belonging to top-rated companies enjoy benefits in the rate of interest and higher quantum of loans as compared to the employees of non-listed companies.

The categorisation suggests that the Super A / Cat A companies are higher rated than the Cat B, Cat C, and so on. Therefore, an employee of a Super A or a Cat A company gets better deals than an employee from Cat Bor Cat C. Banks consider such employees of top-rated companies as hot leads.

Another advantage you get is the lower Personal Loan eligibility norms. An employee of a Super A Company can get Personal Loans while having a salary of 15,000 whereas a similar employee in a Cat B or Cat C should draw a minimum of 25,000 for the same loan. The other benefit they get is the concessions in the processing charges, and so on.

2. Why is it so?

Banks consider these top-rated companies as good employers who not only offer good salaries but also ensure continuity of the employment. Also, employees belonging to such companies do not leave them in search of greener pastures. It is not the case with employees of Cat B and Cat C who would not hesitate to leave their job if they get a better offer. Such a situation can affect the recovery of the Personal Loans provided by the banks.

3. What Can the Employees of the Non-listed Companies Do?

The best option for the employees of non-listed companies is to approach the NBFCs (Non-Banking Financial Companies). The NBFCs do not have such stringent categorisation norms. These NBFCs focus on the salary and repayment capacity alone. They do not give much importance to the category of their employers. These employees will not get more than 1 Lakh to 1.50 Lakhs from a bank even if they draw a salary of 1 Lakh per month. The NBFCs differ in this aspect because they give more value to the income and repayment capacity.

4. Job Stability is a Significant Factor

Job stability plays an important role in your Personal Loan eligibility. Banks give preference to the Super A and Cat A Company employees because they have a stable job. Banks prescribe work experience of a minimum of one year. However, they relax the eligibility norms for employees of these top-rated companies because of the reputation of their employer.

5. Specific Products to Cater to Such Employees

Usually, these top-rated companies maintain corporate accounts with the prominent banks. These companies maintain salary accounts of their employees with these banks. It makes it easy for the banks to provide Personal Loans to such employees because recovery of the instalments is easy. It prompts the banks to introduce special products to cater to such employees alone. These employees get the benefit of lower interest and easy eligibility. Hence, the type of the employer impacts your Personal Loan eligibility. Working for a Super A or Cat A Company gives you the edge over the employees working for the lower categories.

Also Read: How Much Loan Can a Salaried Person Get?