When you apply for a loan, there are all kinds of personal information you must provide. Not only do you have to provide your name and birthdate, but you also must provide your employment history and your current employment earnings. While that may seem strange for them to know, there are some excellent reasons lenders require this information. If you’re interested in applying for a loan but are hesitant because of all the information they need, keep reading to learn why lenders want your employment information.
Most lenders require a minimum monthly income to qualify for a loan. If you cannot pay the agreed-upon EMIs (equated monthly installment), how are you supposed to maintain your loan payments? A lender wants to make sure you can pay your monthly fee, and if you can’t, they aren’t going to approve you for a loan.
Length of Employment
Lenders want to know how much work experience you have so they can see if you’re a reliable worker. They also want to see if there are any periods when you’re out of work. They don’t want to give a loan to someone constantly out of work, so asking about your length of employment helps ensure you’ll make your payments.
When using the iselect personal loan comparison tool, you want to include your proof of income. According to Forbes, lenders want to ensure that they receive their money, so they want assurance of employment and of how much you earn. Most lenders accept the following documents as proof:
- Bank statements
- Employer contact information
Yes, the lender wants to know about your employer, as well. If you work for a reputable company with a high net worth, you are more likely to get approved for a loan. This is because the employer has earned a good reputation within the industry, and banks know they are reliable. This isn’t to say that if you work for a startup, you won’t get approved for a loan. Most lenders pay attention to other things, like your credit report and work history, then they pay attention to who you work for.
Proof of Address
Most lenders also want to know that you have a reliable place to live. This shows that you not only have a steady income, but you’re able to maintain bills and have a stable living situation. Lenders will typically accept as proof your rental agreement, voter registration card, or proof of home or auto insurance.
Proof of Identity
Lenders also want proof of your identity to see that you are who you say you are. Typically, two forms of evidence are required to show proof of identity. Even though you’ve already offered your paystubs, you’ll also have to show two of the following:
- Certificate of citizenship
- Birth certificate
- Military ID
- Other state/country-issued forms of identification
When you apply for a loan, the lender will inquire about your work status. They want to know whether you are a full-time or part-time employee because they are more likely to approve a loan for someone who holds a secure position. Once again, lenders want to ensure you have steady employment before they approve you for anything.
As you can see, a lot of information goes into applying for a loan. When applying for a loan, ensure you bring all the required documents to look professional and organized. If you cannot show the information, they will ask you to return at another time or deny your application. All of these precautions were put into place to protect you, so while it may be tedious, they’re certainly for your benefit.