Salaried individuals are likely candidates to lenders for personal loans as their income is more predictable. On-time monthly payment by a listed company or government organization reduces perceptions of default risk. Banks and NBFCs easily know the creditworthiness of salaried professionals as the willingness to pay can be estimated on the basis of recurring income. Salaried loan applicants are more stable in cash flows compared to self-employed applicants, which is required for unsecured loans.
Income verification can be easily done
Salary customers can furnish proof of income with ease through salary vouchers, Form 16, or bank statements showing periodic credits in their name from their employer. These facilitate underwriting on the part of lenders. Self-employed customers, being more likely to furnish audited accounts, GST returns, and tax returns, which take time to verify, lead towards a bias in the favour of salaried professionals in instant personal loans, which are credit products with fast approvals.
Higher chances of getting a credit score
Since salaried individuals are likely to receive their salaries through bank deposits and settle through credit cards or EMIs for purchasing commodities, their spending pattern comes out in the open. This enables a formal credit history to be made, which gets tracked through their CIBIL score or other credit scores. Good creditworthiness reflects good payment history and enhances their chances of taking the loan. Salaried people are likely to be pre-approved for personal loans by their existing banks on activity account basis as well.
Less chance of volatility of income
Employees, especially government or MNC employees, are considered less prone to instant declines in income by personal loan providers. Such regularity of income gives assurance to the lenders of repayment of EMIs on time. Freelancers or small business owners have spasmodic or periodic income and therefore fall under a higher default risk. The majority of digital lending apps and fintechs today offer instant loans almost exclusively to salaried customers due to this.
Salary is speed in personal loan disbursements
Salaried professionals get faster, smoother, and more efficient personal loan applications due to their periodic income, standardized documents, and credit readiness. For the lender, it's reduced risk and quick processing, and hence jobholders are a preferred customer segment in the instant loan industry.
FAQs
Q1. Are self-employed individuals eligible for instant personal loans?
Yes, but longer and involving more paperwork, i.e., profit and loss statements, tax returns, and GST returns. Incomes of self-employed applicants are perceived as less stable by lenders.
Q2. Instant loan approvals for salaried employees that they need.
Lenders typically ask for PAN card, Aadhaar card, 3–6 months' salary vouchers, salary credits in bank statements, and Form 16 or employment ID at times.
Q3. Would working in a private company reduce my likelihood of loan sanction?
Not at all. Employees working for well-established private firms or whose salary is constant every month are also eligible for instant personal loans, though interest rates may vary based on employer profile.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
