Personal Loans are used for a variety of purposes, ranging from planning a dream vacation to finally renovating your bathroom. To be a savvy applicant, it’s important to do your research to understand what documentation is expected from you during the application process, one of which is submitting your employment history. But what about if you’ve recently changed positions?
In this blog, we’ll explain whether changing jobs affects your ability to get a loan, outline the other factors a lender considers for a Personal Loan application and share tips on how you can increase your chances of approval as a new employee.
Will changing jobs affect getting a loan with a lender?
The short answer? Yes. When you apply for a Personal Loan, one of the factors considered by the lender is your employment history and income. Lenders usually require at least three months’ worth of payslips to confirm your eligibility as a responsible borrower with a steady source of income.
Lenders need to protect their bottom line before onboarding a new customer, and if you’re an applicant without a solid employment history, you may be seen as a liability. That said, you can still apply for a Personal Loan as a new employee; however, you may find it harder to get approved.
It’s also worth noting that lenders consider other criteria during a Personal Loan application, which you will also need to be aware of.
Other factors a lender considers during your loan application
Whether you’re a new employee or have been in your current role for a while, a lender will look at other factors during the application process. To give you the best chance of approval, we’ve outlined some below, so you can submit your application well-prepared.
- Your credit score and history — A lender can learn a lot about you by looking at your credit score. It contains information about your previous credit utilisation, whether you pay bills on time, whether you have any outstanding debt and more. If you intend to apply for a Personal Loan, ensure you obtain a free copy of your credit report to ensure there are no errors or black marks.
- Spending and saving habits — Another indicator of how you manage your money is your daily financial habits. Lenders can track what you spend your money on and how frequently you do so, from takeout to online shopping. They do this to determine your ability to make monthly repayments. That’s why, before applying, you should save some money to demonstrate your healthy financial habits.
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Personal information — Of course, like any online application, you will need to provide personal details, such as your name, proof of address and ID, borrowing amount and more, depending on the lender. You will need to be at least 18 years of age in order to apply.
How can I improve my chances of loan approval as a new employee?
Just because you’ve recently changed roles doesn’t mean your Personal Loan application is doomed. In fact, there are other ways to boost your chances of approval:
- Consider reducing your borrowing amount — High borrowing requests are frequently considered a red flag to lenders, particularly for borrowers with limited employment history. If possible, consider lowering the amount you want to borrow to give yourself a better chance of being approved.
- Obtain a reference from your employer — Nothing makes your application look more commendable than a reference from your employer. Many lenders will reject Personal Loan applications from new employees because there’s a risk the applicant won’t pass their probationary period. Having an employer advocate on your behalf may give them more confidence in your ability to repay the loan.
- Provide as much supporting documentation as possible — While you may not be able to provide a stack of payslips from your new employer, you can submit other important documents to demonstrate that you are a responsible borrower. This could include an investment portfolio you own, proof of income from a side hustle or a steady stream of savings.
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Consider a specialist lender — Many lenders will reject your application regardless of how well–crafted it is. If you have been turned down by traditional lenders, there is still hope. Specialist lenders, such as Finance One, consider applicants with varying financial circumstances, particularly those with a limited or poor credit history or uncommon borrowing needs.
Finance One — accessible and responsible Personal Loan lending for all
We provide a variety of Personal Loan options tailored to our borrowers’ needs, ranging from Travel Loans to Business Loans and Car Loans. We value flexibility and encourage all borrowers to make additional repayments to their loan or increase their payments at any time without penalty. Learn more about our suite of Personal Loan options by getting in touch today.
Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent advice regarding your legal, financial, taxation or other needs, to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information. All loan applications are subject to normal lending criteria. Fees and charges payable. Terms and conditions apply.
