Can Changing Jobs Frequently Impact My Personal Loan Application?
The loan disbursal process has picked up tremendous speed because banks have started to pay more attention to lending. But while applying for a Personal Loan is not as tricky as it used to be once upon a time, banks have also begun to worry about the increasing number of loan defaults. This has led to the adoption of more stringent credit norms. It is your duty, as a loan seeker, to minimise the chances of Personal Loan Application Rejection.
When applying for a Personal Loan, there are many factors that banks and lending institutions take into consideration to ensure you are eligible for the loan. Your age, income, credit history and credit report are some of the essential factors examined. Equally crucial element banks look into is an individual’s employment stability.
All You Need to Know About Personal Loans
An unsecured Personal Loan can be used for almost any significant purchase, but it is issued and supported only by the creditworthiness of the borrower. It is not backed by any collateral, unlike a mortgage or a car loan. As a result, it is less risky for the borrower because the impact is not as immediate, should you fail to repay it. This, in turn, makes it more dangerous for the lender. Naturally, when the stakes are high since the loan amount is enormous, making sure that your Personal Loan application is accepted is vital. Individuals looking to borrow money by applying for this loan need to possess high credit ratings.
Having employment stability, when applying for this loan, is one of the most required elements. This is because it offers the lender assurance, at least to a certain extent, that you are capable of repaying the loan amount promptly. Most banks, in fact, require a salaried professional to complete at least two years of employment and a minimum of one year in their present organisation.
How Does Changing Jobs Lead to Personal Loan Application Rejection?
When you are working with a particular reputed organisation for a long span of time, it helps the lender build trust in you. When the lender has more confidence in your repayment ability, it helps to enhance the chances of loan approval. Changing your jobs too frequently can give an impression of instability and lack of responsibility, and you may come across as unreliable even if you have a steady income. This is why loan applicants who change their jobs on a frequent basis pose a more significant risk for lenders. Constant job hopping increases the chances of getting unemployed, and as a result, it makes your profile riskier. It is essential for banks and other lending institutions to know that they are lending money to individuals who possess a stable income and stable home.
The Importance of Employment Stability
Lenders want to establish proof of ongoing income and employment stability. Many individuals mistake employment stability for remaining in the same company for a long time. Employment stability does not compulsorily mean staying in the same place for many years; it means staying in the same line of work. It also includes having a stable line of employment. Applicants who are self-employed are usually placed under the scanner more thoroughly. This is because lenders want to know that you indefinitely possess a history of reliable income even if you work for yourself.
Changing Your Job in Between a Loan Application Process
Being in a situation where you are waiting for a dream job all your life and not getting it can be frustrating. You make peace with the fact that this coveted job will never come your way and you decide to apply for a Personal Loan to fund some urgent financial need. After the lender conducts the pre-approval and you sign the loan contract. However, to your astonishment, you get to know that you have in fact been selected for the dream job you wanted for a long time now. What do you do?
Many people feel that taking up the job without telling your lender about the job change is the most sensible thing to do. You conclude that if you do not say anything, there is going to be no problem and your loan is going to get approved. Well, as much as you would like this scenario to be true, this not the case. If it does not fit in the bank policy and you do change your jobs in the middle of your loan approval process, the bank can and most certainly will reject your application. Never change jobs in the middle of a loan application, even more so if you are in a new position that cannot afford the contract you have signed up for. Pay attention to employment stability and switching jobs too fast, too soon as this is one crucial aspect that hinders online personal loan application process in a big way.
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