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Business News/ Money / How to get a personal loan with a part-time job? Here are 4 ways

How to get a personal loan with a part-time job? Here are 4 ways

Not all lenders are biased against part-time workers. Some may even offer specialised loan programs tailored to this demographic. It’s essential to research and compare lenders to find one that views your employment situation in a positive light.

Managing to secure a personal loan with a part-time job.Premium
Managing to secure a personal loan with a part-time job.

Securing a personal loan with a part-time job is feasible, though it may be somewhat more challenging than with a full-time position. Here’s a detailed explanation:

  • Lenders prefer to see consistent income to ensure you can repay the loan. While a part-time job can indicate income, lenders often favour a full-time position with a stable history of paychecks.
  • Documentation may be more important. As your pay stubs may not represent a conventional full-time income, lenders might request additional paperwork to confirm the stability of your income. This could entail tax returns, bank statements, or evidence of other income streams.
  • You must be content with either lower loan amounts or higher interest rates. Because of the perceived income instability from a part-time job, you might receive a reduced loan amount or a higher interest rate compared to someone with a full-time position.

Here are some steps you can take to enhance your likelihood of securing a personal loan with a part-time job:

  • Maintain a high credit score: A robust credit history demonstrates to lenders that you have responsible borrowing practices.
  • Demonstrate a consistent income history: Whether full-time or part-time, provide evidence of steady earnings over a reasonable timeframe with past pay stubs or bank statements.
  • Think about getting a co-signer: Enlisting someone with a strong credit history and stable full-time income to co-sign the loan can greatly enhance your chances of approval.
  • Compare lenders: Some financial institutions may be more lenient towards part-time employment. Seek out lenders that take into account alternative income streams or offer personal loan solutions tailored for part-time employees.

By following these suggestions, you can enhance your likelihood of obtaining a personal loan with a part-time job. Nonetheless, always ensure to borrow responsibly and only what you can comfortably manage to repay.

Frequently Asked Questions (FAQs)

Q. Why is having a good credit score essential for loan approval?

Having a good credit score increases the likelihood of being offered a loan at a favourable interest rate. Your credit score reflects your creditworthiness and ability to repay debt. For those considering a personal loan, maintaining a credit score above 750 is recommended. Individuals with a very low credit score might face loan denial, whereas those with a moderate credit score might secure a personal loan but at a higher interest rate.

Q. Is early repayment permitted for personal loans?

Some lenders may permit early repayment of the loan, depending on their specific terms and conditions. You might incur a pre-payment fee as a result. Therefore, if you plan to pay off your loan ahead of schedule, it's important to verify with your lender if this option is available.

Q. What is the loan repayment period for personal loans?

Most banks and financial institutions offer borrowers the flexibility to select a loan repayment period ranging from one year to five years, according to their preferences.

Q. How is the maximum loan amount determined?

When determining the maximum personal loan amount for salaried individuals, banks and financial institutions ensure that the EMI does not surpass 30-40% of the applicant's net monthly income. Existing loans being serviced by the applicant are also taken into account. For self-employed individuals, the loan amount is based on the recently verified Profit/Loss statement, considering any additional liabilities, such as existing business loans, that the applicant may have.

Q. Can my spouse and I apply for a joint personal loan?

You can apply for a personal loan either individually or jointly with a co-applicant. The co-applicant must be a family member, such as your spouse or parents. Having a co-borrower allows your loan application to be evaluated in a higher income bracket, potentially enabling you to secure a larger loan amount. However, it's important to note that if either you or your co-applicant has a poor credit history, it may negatively impact the approval chances of your loan application.

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Published: 14 Apr 2024, 01:30 PM IST
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