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Loan application and approval in today’s era is as easy as it was never before. At the same time, the primary focus of financial institutions is to reduce the total number of loan defaults. Very often people blame their credit score to be responsible for loan application rejection.
There are various other factors that play a key role in getting your loan application approved. So if you are looking forward to applying for a personal loan in the UAE, and you’ve been hopping jobs within the past few years we’ll let you know how it can affect your loan application. Before we go ahead and decode the relation between switching jobs and approval of personal loans with salary transfer in the UAE, let us take a quick loan on personal loans with salary transfer.
Personal loans with salary transfer are one of the easiest forms of credit after credit card in the UAE. A personal loan is an unsecured loan that can be used to counter almost all types of financial issues and requirements. Personal loans with salary transfer come with low rates of interest, minimal documentation, quick approval and disbursement period and flexible repayment tenors that make it quite popular amongst people seeking loans in the UAE.
Approval of personal loans with salary transfer is highly dependent on the creditworthiness of the applicant along with their job stability and age. Personal loans are quite flexible and user-friendly from the perspective of the borrower since the impact is not immediate. Contrary to the impact over the borrower they’re a bit dangerous for the lender. When the risks are high based on the market situation and the loan amount is huge to ensure that the loan application is accepted it is vital to have a high credit score.
Furthermore, apart from the high credit score, it is crucial to have stability in terms of employment as financial institutions assess the repayment capacity of a debtor based on employment stability. The majority of financial institutions in the UAE require a certificate from the employer of the applicant that certifies that the employee has successfully completed a period of two years in the organization.
If you have been switching jobs recently within the past few years there is a high probability that the financial institution might reject your loan application since there is a lack of employment stability. In the next section, we’ll shed light on the impacts of switching jobs frequently on a personal loan with salary transfer applications in the UAE.
When the loan applicant has been working with an organization for a long time, it helps the financial institution to build trust in them. The loan officer thoroughly analyzes the application and various other documents before approving the loan. Switching jobs frequently creates an impression of unsteadiness and lack of responsibility towards the lender which increases the probability of loan rejection.
Hence applicants who’ve been changing their jobs frequently pose higher levels of risks for the lenders and therefore the chances of rejection of the application increase substantially. Constantly switching jobs increases the risk of getting unemployed, which in turn increases the risk factor over your profile. It is vital for financial institutions and banks to be aware of the fact that they are lending money to an individual who is financially stable and will be able to repay the debt on time.
Banks and financial institutions lend money in order to make a profit over the principal amount in the form of interest. Therefore, to make sure that the financial institution receives its share of profit lenders must establish proof of financial and employment stability. Very often people get confused over financial stability to be working in the same organization for a long period which is not correct. Employment stability refers to working in the same line of work. Even self-employed professionals have to undergo a financial background check to show reliable sources of income even if you work for your own company.
It is quite common for most of us to struggle for our dream job. To understand the impact of switching jobs amid personal loans with salary transfer application let us consider an exemplary situation.
Suppose you’ve been struggling to get your dream job and you are unable to get it at the moment. Now you decide to apply for a personal loan with salary transfer to counter an emergency and surprisingly in midst of the application you get your dream job.
For most people, the first option that will come across their mind will be changing the job without informing the financial institution. However, if the financial institution finds out that you have changed your job in the middle of the loan application process your request is most likely to be rejected. Therefore, it is recommended that applicants should never change their jobs in the middle of the application process.
In a Nutshell
Banks and financial institutions lay significant emphasis on the job stability of the loan applicant. Applicants with a track record of frequently hooping jobs impart a negative impact over the lender and increase the risk which eventually increases the probability of loan application rejection.