If you have applied for a loan in any bank, it is quite easy to understand how important employer status is. Even though you have a bit low credit score, low income it is still possible to get loan approved from bank, if you are employed with a reputed and high net worth company. It is true that many factors are taken into consideration when it comes to approving a loan, but most of these are associated to the finance aspect. Once you have decided to taken a loan, it is important to go through the eligibility criteria with each bank. According to the loan type and bank, the specifications of each loan will differ. Thus it is very crucial to go through all the details of the loan requirement before applying for one.
Important Aspects Banks/FIs Consider When You Apply for a Loan
- It is crucial to have credit score of 700 or above. And even if you have a very good credit score, it is important to maintain it with continuous timely payment of all outstanding debts.
- Past payment records are always taken into consideration and this will impact the loan amount in itself.
- In case of a need for guarantor, even his/her payment tracks are checked.
- Non-EMI payment transactions are taken into consideration as well by the lending bank to access the repayment capacity of the individual.
Apart from all these, great importance is given to the details of the employer you are employed at. If your employer have tie-up relation with the bank you are looking to apply loan, then it is not just easy to get a loan but as well be processed with very low rate of interest. Usually in case of salary account, it is quite easy to get loans as the base of employer performance and credit worthiness.
Factors Considered by Lender apart from Employer Status
- Monthly Salary
- Relationship with the bank
- Property Value
- Credit History
- Your employers category
- Professional details/Business status
Even if the monthly salary is just ₹ 15,000/- it is still possible to get loan approved from the bank, if you are employed with a well reputed company. Being an employee it is easier to get a loan as compared to applying for one as a self-employed. Most banks consider offering loan for employed individuals safer than lending money for self-employed.
Documents Required for Loan Application for Salaried Applicants
- Age proof
- Address proof
- Employee Identity card copy
- Last 3 months salary-slips
- Form 16 or Income Tax Returns
- 2 Photographs
- Bank Statement of last 6 months
- Processing Fee Cheque
- Signed Application Form
As small enterprises have low capital investment and are not well established, it is riskier to lend loan at their rating. Factors such as stability and loan repayment capacity will become doubtful. If the employer faces some financial troubles, there is high chance of close downs and the employees will have to suffer for the safe. If a bank lends loans to such company employees, then even the bank will have to suffer for the same. The probability of being jobless is taken into consideration. On the other hand if the loan is requested by someone working in large companies, the HR policies will be more organized and stabilized. It will not just help in completing the formalities easier but will also give guarantee to the banks that they have lent money to safe hands.
Getting done of all paper works and financial support details will turn relatively easier. Another main aspect of considering the employer for loan is only when the employee has spent at least one year in the firm. If there is no enough experience in the company, maximum benefits cannot be reaped. Though employee status plays a very vital role, not all employers are given same recognition. Some banks consider only listed employers. If you are an employee at listed companies, then getting loan from banks is easy. On the other hand if your company is not listed, then for quick loan processing, apply for loan at NBFC.