How to Get a Personal Loan as a New Employee
Perhaps the most important factors that qualify an applicant for a loan are employment and income. Lenders value employment so much that you can qualify for a loan if you just started a new job, or even if you only have an offer letter and haven’t started yet.
An offer letter indicates future income, reducing risk in the eyes of the lender regardless of whether your start date has come or not. However, lenders also value stability and reliability, so if you haven’t held your current position for a significant length of time, your application may be penalized.
There are steps you can take as a new employee that will improve your chances of getting a loan, and this article details what those steps are and how they can help you obtain credit.
Can New Employees With an Offer Letter Get a Personal Loan?
In short, yes, a new employee with an offer letter can get a personal loan, though lenders often prefer that an applicant has held their current position for a certain minimum length of time. This can vary from 30 days to one year, but ultimately, the longer you’ve held your current position, the more reliable your income and employment will be deemed by the lender.
If you are seeking a personal loan with only an offer letter and haven’t started your new position yet, the lender will likely ask you to provide proof of consistent employment prior to your new job. Lenders will also take other factors into account like debt-to-income ratio and credit score. Income is relevant as well. The higher your income at your new position, the better your chances of getting accepted by a lender and obtaining lower interest rates.
6 Best Lenders Who Offer Loans for New Employees
Each lender has their own criteria for loan qualification; some have minimum income requirements or require that you have been employed for a certain minimum length of time, while others are more inclusive in their conditions. The following table breaks down the employment and income requirements of 6 of the most prominent online lenders and banks that offer loans for employees with an offer letter or a new job.
|Lender||Minimum Full-Time Employment||Minimum Income|
|Stilt||No Minimum||No Minimum|
|TD Bank||Must provide proof of income for the previous 2 years||No Minimum|
|BBVA||Typically requires pay stubs from the previous 30 days to verify income||No Minimum|
|Wells Fargo||No minimum but requires all employer details for the past 3 years||No Minimum|
|Lending Point||No minimum, but at least 12 months at your current job will help||$25,000 per Year|
|SoFi||Must be employed, have sufficient income from other sources or have a job offer to start within the 90 days||No Minimum|
Loans for Temporary Workers
People who work temporary jobs often struggle to get access to certain financial services. Lenders are sometimes skeptical when they need to lend money to people who work temporary jobs. But you’ll be glad to know that you can indeed qualify for credit even if you work a temporary job. You can always try offer letter personal loans.
Secure an Offer Letter
Security is the name of the game when it comes to credit. Lenders want to find ways to secure them from risks. You need to find ways to prove to lenders that you pose a low risk. Applications for credit with lower risk tend to have a higher success rate
So, get a job offer and have printed proof of it. A job offer serves as a sign of future income and to a lender, it means you can repay the loan. Then use it to apply for offer letter personal loans. Proving you have a future stream of income will improve your chances to get a loan.
Stay in Your Profession
Maybe you are required to change employers at a rapid pace due to the circumstances of the field you work in. That’s fine, but try your utmost best to stay in your profession. People who change the fields they work in usually struggle to get loans.
Don’t jump from one industry to another too often. Traveling nurses should, for instance, remain in their field and not wait on tables or work similar retail jobs in between nursing. Remain in your field since it conveys a message of greater stability to lenders and will improve your chances for offer letter personal loans.
Get a Cosigner
A cosigner is someone who also accepts responsibility for the loan you take. It means they will be responsible to repay the loan if you aren’t able to. You can also use the credit score of a cosigner to increase your chances of getting a loan. A credit score is a way to measure your ability to repay a loan. Having a cosigner accept responsibility with you for a loan will greatly increase your chances to get a personal loan.
Get Pre-qualified for a Personal Loan
Pre-qualification is like a quick test of your eligibility before you formally apply for a loan. Pre-qualification usually happens in the form of a soft credit check. A soft credit check is a method lenders apply to screen your credit report without affecting it or logging a credit application on your report. After performing a soft credit check they might even be able to tell you what the interest rate on your loan will be if you opt to accept it.
Look for loan options that check your eligibility with a soft credit check. You will know if you qualify for a loan even before you apply for it and may even know the interest rate applicable to the loan as well.
Don’t Apply for More Than You Need
A loan is like a double-sided sword because it cuts both ways. On the one side, it requires you to repay it (and you don’t want to take a loan you can’t repay). On the other side, it reduces your chances for more credit (until you’ve repaid it).
It’s like applying for jobs you know you’ll have a good chance to get. The same with offer letter personal loans. Apply for a loan amount you know you’ll be approved for. It should obviously be enough to meet your needs, but don’t apply for an amount beyond the strength of your credit score. Applying for something within your means also allows you to repay it much faster.
Car Loans with Job Offer
Car loans almost work like a mortgage. But did you know you can get a car loan if you have a written job offer? It works on the same principles as offer letter personal loans. Here are a few ways in which you can improve your chances to get car loans with job offers.
Get a Job Offer Letter
Get a job offer in a written form and provide it with your application for a car loan. This proves to your lender that you will earn a salary capable of repaying the vehicle. The job offer helps to ease the mind of your lender since it lowers the chances that you might default on your car loan (lose the capability to repay the loan).
Make a Sizeable Down Payment
A down payment is a type of deposit you pay upfront when you loan a car. The down payment serves as a way to show the lender your commitment to the process. You will lose the down payment if you don’t repay the loan. A larger down payment decreases the lender’s risk to loan you money.
A down payment is also a nice way to lower the interest rate on your car loan. A larger down payment decreases the amount of debt on the car. Less debt means less risk and in turn, makes the lender lower the interest rate. A lower interest rate decreases your monthly payments and helps you to settle your car loan much faster.
Get a Cosigner
A cosigner will help to increase your chances to get a car loan. You can use the credit score of a cosigner to apply for a car loan. It will also help to lower the interest rate your lender would have charged you (compared to if you were the only one responsible for the loan).
7 Tips to Get Approved for a Loan as a New Employee
As a new employee without a significant history at your current employer, you must demonstrate your reliability to lenders in other ways. Following the tips below will help reduce the risk for the lender and thus improve your chances of being accepted, as well as help you get better interest rates.
1. Check Your Credit History
Besides employment and income, credit history is the most important factor that lenders consider, so you should know your credit score before applying. Having a history of paying your bills on time and keeping your debt-to-income ratio low will show lenders that you are financially responsible. If your credit score is subpar, you can improve it over time by staying on top of your bills and managing your debt.
2. Wait to Apply
Probationary periods upon starting a new job are typically 3-6 months, and if your need for a loan is not urgent it can be helpful to wait that period and apply once you’ve held your job for a more substantial amount of time. Your financial profile will be much stronger if you can bring a single consistent, reliable income source to a lender.
3. Apply for a Lower Amount
The higher the amount of the loan, the greater the risk for the lender. So requesting a smaller loan is a simple way to improve your chances of being accepted. Since a stable income and employment reduces this risk, if you stay at your position for a long time and have a good income, you can apply for a larger loan.
4. Let Your Employer Know
Lenders sometimes verify the employment information in your application by contacting your employer. By letting your employer know that you are applying for a loan, you can ensure that they are prepared to interface with the lender if they are contacted.
5. Contact the Lender Directly
If you have any questions about the conditions and requirements of a specific lender, contacting them directly can be helpful. By speaking with a lender you can get a thorough understanding of their criteria, and you can make sure to take the proper steps to be accepted.
6. Meet the Other Minimum Requirements
The length that an applicant has held their most recent job is only one of the criteria lenders use; other requirements typically include having a minimum income level and a minimum credit score. If you can meet these other minimum requirements, then you may still be accepted for a loan regardless of how long you’ve been employed.
7. Provide as Much Documentation as Possible
Since the key to getting a loan is establishing trust with the lender, by providing as much documentation as possible of your assets will demonstrate an effort to build trust. Furthermore, if there are any financial assets you have that may not be reflected in metrics like credit score, debt-to-income ratio, or income, providing more documents can help illustrate your ability to repay the loan on time.
Having just recently started a job, or not having started at all, is not an ideal time for getting a loan since lenders value consistent employment in a loan applicant. However, there are many other factors to consider, and if you have a strong financial profile and take the steps listed above, you might be able to obtain a loan with only an offer letter.