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Disclosure: Stilt is a lending company. Nonetheless, we are committed to recommending the best loan products to our readers when their needs are outside Stilt’s loan offerings.
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.
In October 2019, 128,000 jobs were added to the U.S. economy. If you were one of the people who started a new job or will start a new job soon, you may be able to get approved for a loan based on your offer letter.
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.
That said, it is possible for new employees with job offer letters to qualify and get approved for loans. Whatsmore, 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.
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Technically speaking, you don’t have to be employed to qualify for a loan. If you’ve got a healthy credit score and a reliable cosigner, you can qualify for some personal loans.
If you are newly employed and don’t have a cosigner, your ability to get a loan will depend on the lender’s criteria. In some cases, a lender may require you to have been at your new job for six months or even a year before you’re eligible.
Other lenders, though, will not require you to have been at your job for any specific amount of time before you apply for a loan.
In many instances, all you will need is an offer letter and proof that you have accepted your new position. Some lenders will even provide loans for new employees as long as their start date is within 90 days and you have current income. If your offer letter shows that your salary will increase, you could even qualify for a larger loan amount and better terms.
While the options will be more limited, there are even loans for temporary workers. Access to loans for temporary works is usually contingent upon their current work situation and if they have a letter of employment for their next job in-hand already. This will show lenders that you will continue to have income and be able to make loan payments.
Each lender has its 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|
Stilt considers a wholistic range of features when considering personal loan lenders, including, but not limited to: accessible customer service, reporting of payments to credit bureaus and financial education, flexible payment options, related fees, soft credit checks, and transparency of loan rates and terms. We also review consider the complaints filed with agencies like the Consumer Financial Protection Bureau. Stilt is not compensated in any way for our reviews and recommendations.
As a new employee without 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.
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. Paying your bills on time and keeping your debt-to-income ratio low will show lenders that you are financially responsible.
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.
Apply for a Lower Amount – 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.
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.
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.
Meet the Other Minimum Requirements – Length of employment is only one risk assessment factor. Lenders will also consider your income level and 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.
Provide as Much Documentation as Possible – Since the key to getting a loan is establishing trust with the lender, providing as much documentation as possible about your assets will demonstrate an effort to build trust. Some assets may not be reflected in metrics like credit score or income, so providing more documents can help illustrate your ability to repay the loan on time.
Temporary workers struggle to access loans and lines of credit due to the nature of their jobs.
Business site Entrepreneur defines temporary workers as “Employees who are not permanently hired but hired just for limited periods of time”. Their work is not always consistent, and for lenders, that’s a red flag during risk assessment.
Temporary worker jobs include:
Even though temporary workers are not ideal borrowers, it does not mean they cannot access lines of credit and loans. Contractors, freelancers, and other temporary employees just have to work harder to show lenders that they can make loan payments.
There are several steps you can take as a temporary worker to improve your chances of being approved for a loan. These steps are:
Secure an Offer Letter – As this article has stressed, obtaining a job offer letter increases your chances for loan approval because it shows lenders your potential to make payments. For temporary workers, having an offer letter for your next job while currently under contract can further show that potential.
Stay in Your Profession – If you are currently employed on a contract and receive a contract extension it will show lenders that your income will be consistent for a longer period of time. The longer the contract, the greater your chance for approval will be.
Get a Cosigner – If you’re on a contract with an end date coming up, getting a cosigner can help you to get approved for a loan. A cosigner with a great credit score and a stable job will take some of the risks out of giving you a loan because the lender can feel confident that payments will be made if you don’t secure future employment. To learn more about cosigners, click here.
Whether you’re looking to take out an auto loan or a personal loan to buy a car, a job offer letter will increase your chances of approval. The same limitations will apply, though. The length of your employment, salary, and other factors will determine your eligibility.
That said, there are some ways to lower a lender’s risk when giving you a loan. Below are a few ways in which you can improve your chances to get car loans with job offers.
Many of the same strategies used for improving your chances to get a loan as a temporary worker will help when it comes to getting a car loan:
Get a Job Offer Letter – As mention above, getting 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 – The down payment serves as a way to show the lender your commitment to the process and decreases the lender’s risk to loan you money. As added benefits, a down payment also lowers your interest rate and decreases the amount of debt on the car. The ideal car down payment is 20%, according to AutoTrade.
Get a Cosigner – Again, 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).
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.
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