12 MAY, 2022

When it comes to availing a loan, every small detail of your life matters, be it your age or job history. It is because every factor can impact your repayment capacity and so lenders want to know this information to determine your loan eligibility. Therefore, factors like your age, education, place of residence, and income are closely scrutinised when lenders review your application. However, lenders also demand your professional and financial profile. They want to know how much you earn and might ask where you work. You might wonder if it has any significance to your personal loan eligibility. The answer is yes. Your career graph and employment profile have a significant impact on your personal loan eligibility.


What is a personal loan?

A personal loan is an unsecured loan offered by financial institutions to individuals for their financial and personal needs. A personal loan comes with various attractive features and benefits. You can use the loan amount for any purpose as per your need. There is no need not mention the purpose of the loan to the lender. The application process is usually online and you can apply for it by filling out the application form and uploading the documents.


Being an unsecured loan, there is no need to arrange any asset or collateral to avail the loan. Lenders also offer flexible repayment options where you can choose the tenure as per your financial comfort so that you can pay the Equated Monthly Instalments (EMIs) comfortably. However, to get a personal loan, you need to fulfil the personal loan eligibility criteria. It would be best to use a personal loan eligibility calculator before applying.


How does your career graph affect your personal loan eligibility?


Your career graph, employment history, and job profile say a lot about your repayment capacity. Similarly, your income tells the lender if the loan you are applying for is within your budget. If you apply for a higher loan amount with a low monthly income, the lender can reject your application. If they approve, they might charge a higher interest rate to cover the risk of default.


Similarly, lenders prefer applicants who have a stable employment history and steady income flow. If you have changed a lot of jobs recently, it could affect your income flow and thus your eligibility. This is why it is easier to avail a loan as a salaried individual than as a self-employed person. Moreover, lenders require you to be employed in a company for at least two years to be eligible. It reflects your creditworthiness, reliability, and income flow. Hopping too many jobs can raise concerns about your creditworthiness. 


Lenders prefer applicants employed with government and public sector companies or multinational companies due to the same reason. Not only do they have the security of a fixed and steady income, but they also have higher chances of professional and income growth. The lender might not approve a loan to businesses who have seasonal income or people involved in freelancing.

Your career graph can impact your loan repayment capacity and is an important determinant of your loan approval. While you plan to apply for a personal loan online, ensure to check the personal loan eligibility and avoid switching jobs too many times.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.