I Just Started My Job But Need a Loan: What Are My Options?

Starting a new job is always an exciting time But sometimes, life can throw you a curveball that requires money you don’t have yet If you’re in a bind and need a loan shortly after beginning new employment, don’t panic. You still have options.

I found myself in this situation recently After leaving my previous company, I took a couple weeks off to relax before beginning my new role But right after my start date, my car broke down. I needed it to commute to the office and didn’t have the savings to cover an expensive repair bill.

After doing some research, I learned that getting approved for financing as a new employee is possible, though potentially more challenging than if you’ve been at your job longer. Here’s what I discovered about loans for those who just started working.

Can I Get Approved for a Loan If I Just Began a New Job?

The good news is yes, you can qualify for a personal loan even if you recently started employment. Lenders understand that life happens, and that even new employees may suddenly need access to funds.

According to the Equal Credit Opportunity Act, lenders cannot legally reject your application based only on your length of employment. They must consider other factors too, like your income, existing debts and credit history.

That said, limited time on the job may still negatively impact your chances of approval and loan terms. Many lenders prefer applicants who have at least 6 months to 1 year of employment history. But some are more flexible, offering financing to borrowers who just began working.

Types of Lenders That Work with New Employees

If you need money shortly after starting a job, consider these options that tend to be “new employee friendly”:

• Online lenders: Online lenders like Upstart and LendingPoint often have more lenient eligibility requirements than brick-and-mortar banks. Some don’t specify a minimum time employed. As long as you have regular income, you may qualify.

• CDFIs: Community development financial institutions aim to serve underbanked groups. Local CDFIs may offer discounted loan rates to new workers.

• Employer loans: Some companies provide paycheck advances directly to employees. Check if yours offers this benefit. There may be borrowing limits though.

• Cash advance apps: Apps like Brigit and Dave let you borrow small sums (often $50-$250) until your next paycheck. Useful for small emergencies.

• Medical residents: Options like the Sallie Mae Residency Relocation Loan provide financing for new medical residents to relocate and cover other costs.

6 Tips for Increasing Your Chances of Approval

As a new employee seeking a personal loan, you can better your odds of getting approved and scoring a decent rate by:

• Checking your credit report for errors that could be lowering your score unfairly. Dispute any inaccuracies.

• Paying down debts to lower your credit utilization ratio before applying. This can boost your credit score.

• Applying for a smaller loan amount. Lenders view smaller loans as less risky. Start with only what you absolutely need.

• Letting your employer know you plan to list them for verification. This prevents any surprises when the lender calls to confirm your employment.

• Disclosing assets or savings you have. Even if it’s not much, it shows lenders you have a financial safety net.

• Getting pre-approved by contacting lenders to see what else they need beyond your application. This gives you a chance to provide more documentation that could help.

I tried several of these tactics myself when applying for my auto repair loan after starting my new job. My credit score wasn’t terrible, but far from excellent. To better my chances, I paid off a credit card, corrected a mistake on my credit report, and asked the lender what else they needed to supplement my application. In the end, I got approved for a loan with one of the more competitive interest rates they advertised.

What if I Only Have a Job Offer Letter?

If you haven’t even started working yet, a job offer letter may be enough to get approved with certain lenders.

For example, online lenders like Upstart and SoFi may lend to applicants whose job start date is within the next 3-6 months. They still want to see proof of your upcoming salary. Make sure the offer letter confirms your position, compensation, and start date.

This route probably won’t work with banks and credit unions that have stricter requirements. But some online lenders are more concerned with your overall financial profile than length of employment. Just don’t expect to borrow huge sums without a paycheck yet.

Alternative Income Sources to Qualify

You don’t necessarily need W-2 income to be eligible for a personal loan. Many lenders allow you to use other sources of regular income in their underwriting process.

Common examples of “non-employment” income that may help you qualify include:

• Self-employment or freelance work
• Social Security benefits
• Retirement/pension income
• Disability benefits
• Child support or alimony
• Tips
• Investment account distributions

I know someone who got a loan approval shortly after opening his own consulting business by providing the lender with just a few months of bank statements showing regular client payments.

The key is showing the consistency of these alternative income streams. Sporadic income likely won’t satisfy most lenders.

What If I’m Still Struggling with Approval?

If you find your loan applications are getting rejected left and right, don’t lose hope. Here are a few last ditch moves to consider:

• Apply for a secured loan or credit builder loan. These require you to put down collateral like a CD or savings account, reducing the lender’s risk.

• Ask someone to co-sign the loan with you. Their income and credit will factor into the application.

• See if you qualify for any credit union loans. Especially if you already have an account, they may be more flexible than banks.

• Try borrowing from an online peer-to-peer lender like Prosper. Individual investors often have more relaxed standards than institutions.

• Build up your credit and employment history for a few months before reapplying. Slow and steady wins the race.

The Bottom Line

The first few months in a new job can be financially stressful. But if an emergency strikes, don’t assume you’re out of luck when it comes to getting a loan. Plenty of lenders work with new employees and offer bad credit loans. With a little research, you can find financing to tide you over until that first paycheck comes in.

Just make sure to only borrow what you absolutely require. And have a plan for paying back the loan on time to avoid hurting your credit. With some discipline, getting a loan as a new employee can actually help build your credit history and financial reputation.