Personal loans are extremely useful for paying huge medical bills, funding a foreign trip, or your marriage too. However, it’s not easy for everyone to get one. This is because you must have all the necessary documents. Furthermore, the nature of your income also plays a big role in the loan process. This is why these loans are more suitable for salaried professionals over entrepreneurs because of the following reasons:
People with jobs can get personal loans easily compared to the self-employed and entrepreneurs. This is because, in the case of the latter, the banks have to consider a variety of factors such as assets, nature of the business, revenue, etc. Also, there is less certainty in a business than a job. So, a bank would be less inclined to sanction personal loan unless the applicant offers collateral or applies with a co-applicant.
Less Impact of CIBIL Score
If you want a personal loan without CIBIL score, then having a salary is much better than income from other sources. Although most banks want the applicants to have a CIBIL score of at least 750, you may qualify for a loan even if yours is lower granted you have a sufficiently high income.
If you a salaried individual, then it means you receive a certain amount of money every month. In addition to that, this monthly income is also likely to increase over time as you will get a raise or possibly a promotion in the future. All these things make loan repayment easy and comfortable. In other words, you can take a personal loan without worrying about clearing the debt.
Obstacles for Salaried Professionals
As you can see now, if you have a salary, then you can get a loan rather easily. However, there are some cases in which even salaried candidates find their loans rejected. The following cover some of the most common examples:
Most banks cap the personal loan amount for security purposes. In most cases, you can get a personal loan up to 10-12 times your monthly income. This is to make sure that you don’t get too big of a loan that you can’t repay it on time or at all.
If you tend to change jobs frequently, then you may have a hard time getting a loan. However, it’s not hard to see why this kind of practice won’t sit well with any lender. After all, a bank would want the borrower to have a stable job and be within their reach geographically.
Low CIBIL Score
If you have a high income, then it can certainly help with your loan application. But if your score is below 500 which means it’s poor, then not many banks will be comfortable approving a loan considering the same.
The number of people defaulting on a loan have increased considerably today. Thus, banks take all kinds of measures to minimize risks on their end. To increase your chances of loan approval, then make sure that you have all the documents, a sufficiently income, and a high credit score.