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We often find ourselves in circumstances where we urgently need money. An unexpected medical bill or a car repair can empty your pockets and hurt your financial well-being. While such situations feel challenging, you can find loans to finance your situation.
New employees starting their careers may find it difficult to obtain loans. Potential creditors associate a lack of job history or a recent switch with lesser job security, so they are hesitant to lend. Some companies have assistive financial lending measures in place specifically for new employees.
This is particularly common in Italy, where employer-provided loans make up 15.8 billion euros. Read on to learn about such actions, as well as different alternative emergency loans you can avail of as a new employee.
Financial assistance services for new employees
Starting a new job can be an exciting and challenging experience. While adjusting to the new workplace, getting to know your colleagues, and familiarizing yourself with your responsibilities, life's unexpected emergencies can still arise.
Emergency loan program for new employees are financial assistance initiatives some companies offer to support their newest team members during unexpected financial crises. These loans are designed to help employees bridge short-term financial gaps, allowing them to address urgent needs without resorting to high-interest credit cards or payday loans.
They can be a valuable resource to employees who may not have built up substantial savings yet. The policies for obtaining such a loan can differ significantly from company to company.
Similarly, the amount you can get in emergency funds also depends upon your employer’s policies.
Google famously provides its employees loans at low interest for various purposes, such as to pay off their student debt. Consequently, the company has one of the best employee retention and financial stability, and the top employees prefer working for Google.
In 2020, Google recognized that they had a student loan debt crisis for new employees and vowed to match student loans up to $2,500 to help employees pay them off. Since this policy was implemented, Google employees have been polled as one of the happiest in the nation.
There’s also Nvidia, a tech company that facilitates new employees with financial assistance services. New employees at Nvidia can apply for over 350$ per month in reimbursements if they have graduated within the past three years to pay for their student loans. They finance most student loans, including health professional loans and consolidation loans. These initiatives make Nvidia one of the most sought-after companies.
Getting an emergency loan from your employer
The general process of getting an emergency loan from your employer involves asking your HR about the availability of such programs. If you are eligible, they will provide you with application forms and other necessary resources.
Complete the form, which usually asks for information about your emergency, your required loan amount, and your preferred repayment terms. You may need to provide additional documents to support your emergency claim. For example, you can add a medical bill if you seek funding to cover unexpected medical expenses. Doing so increases your chances of approval.
Carefully review the terms and conditions of the loan, including the interest rate and repayment schedule, to ensure you understand your obligations. Once your application is approved, your company will disburse the funds.
These loans are typically paid directly to the service provider or you, depending on the nature of the emergency. Your loan amount is then deducted from your monthly paycheck for a specific period until you are not in debt anymore.
Benefits of employer-provided emergency loan schemes
Providing new employees with emergency loan schemes has several benefits both to the company and the employees. They include:
1. Financial stability
New employees barely have any savings, and it is difficult for them to manage unexpected circumstances. Employer-provided loan schemes help them stay financially stable. Without access to emergency loans, new employees might resort to high-interest options and risk not paying back, which lowers their creditworthiness.
Financial stress resulting from unexpected expenses can affect your overall well-being. Emergency loans provide a safety net, reducing the stress of managing financial crises. This improved peace of mind can positively impact your mental and emotional health.
2. Employee retention
When companies offer financial assistance in need, employees feel valued and supported. This positive experience can increase job satisfaction as employees recognize that their employer cares about their well-being, increasing employee retention. By alleviating financial stress, emergency loan program allow employees to concentrate on their work, increasing productivity and job satisfaction.
A company known for its employee support programs will likely attract top talent in the job market. Potential employees are more inclined to seek companies that value their well-being, not just their professional skills. Such companies often develop a positive reputation in the industry and among potential job candidates.
3. Favorable loan terms
Emergency loans from your employer often come with lower interest rates than traditional lending options, such as credit cards or payday loans. This means you'll pay less interest over time and not accumulate overwhelming debt due to a short-term financial setback.
Traditional lending options often have repayment terms that you cannot pay, which leads you to default. Companies offering emergency loans typically provide flexible repayment options. You can often repay the loan through manageable deductions from your paycheck over time.
Alternatives to company-sponsored emergency loan program
Not every company offers such assistive programs, leaving new employees with future options. In case you are stuck in such a scenario and your company does not offer an emergency loan program, here are some alternatives you can consider.
1. Personal loans
Personal loans can be used for any purpose. You can take out these loans from your local bank without explaining or justifying the purpose. These usually require a credit score check, so you may be ineligible if you have a bad credit score. However, if you get the loan on bad credit, your interest rate will be higher, and repayment terms will be stricter.
If you are starting out in the job market, your lack of credit history could ring alarms for lenders. Even with a good credit score, some lenders may consider you a high-risk creditor due to your lack of job security, so expect that some lenders may refuse to lend. Asking for a low amount as a new employee also helps.
Other than that, personal loans usually come with lower interest rates and longer repayment terms, allowing you to pay them off conveniently. In personal loans, you receive as much as $10,000 at an interest of 7.5%, making it ideal for financing emergencies.
According to a survey by statistica conducted in the United Kingdom, 71% of the respondents chose personal loans because of their APR, while 61% considered the repayment terms when making their decision.
Before applying for a personal loan, carefully research multiple lenders and compare their rates and fees. You will need proof of income and documentation, so ensure your documents are ready. To increase your chances of getting approved as a new employee, consider getting a cosigner with a good credit score on your application.
The lender will give you a form to fill out, which you must complete honestly. After submitting your application, the lender will perform a credit check on you, and after approval, the loan amount will be disbursed to your bank account in a week.
2. Payday loans
Personal loans can finance your emergency, but they require a credit check and make you wait several days before receiving the payment. Fortunately, you can get a payday loan on bad credit and get money on the same day. They are a suitable option for new employees who cannot get a personal loan approved.
Payday loans are small-sum loans designed to last until your next payday. They are short-term loans and don’t involve a credit check. They have high interest rates, and you must repay most loans within two to four weeks. 75% of the individuals who take payday loans in the United Kingdom struggle with paying them back.
While payday loans can quickly get you money, they are risky. Several lenders offering payday loans are loan sharks that can trap you in a cycle of debt with APRs as high as 300%. You must thoroughly research your lender and take out the loan only from a reputable lender. Some employers also offer payday loans, so consider asking your company for their loan policy before you scout for other, riskier lenders.
3. Car title loans
Personal loans are unsuitable for emergencies because they take too long and require a good credit score. While payday loans can be an alternative, they often have a high APR and may not unlock much funding. A third option for you is to get a car title loan, but it requires you to have a personal car.
A car title loan is a secured loan in which you put collateral against your loan amount. The lender can seize the collateral to recoup their losses if you fail to pay back the loans, which, in this case, will be your car. However, a lender only has your car’s title, proof of ownership, and a duplicate set of keys, so you can drive your car freely as long as you make regular payments.
A car title loan generally allows emergency funding up to 25% to 50% of your car’s value. If your vehicle is in good condition, you can unlock more funding, and vice versa. Your car’s value is checked by an on-site inspection of your vehicle or by the pictures you provide the lending company.
As car title loans are without a credit check, they have a higher interest rate than personal loans. However, since lenders secure their loans with collateral, their risk decreases, so the interest rates are not as high as payday loans.
Remember that you need a lien-free car title to qualify for a car title loan. If your car is in someone else’s name, or you are driving a car on lease or have any outstanding auto loan, you cannot get a car title loan. Getting approved can be difficult since these loans don’t require a credit check. Generally, if you have a stable day job that pays well, you can get approved for a car title loan.
How Empuls can help companies in early wages & loan programs for their employees financial well-being
Empuls offers seamless solutions for companies looking to prioritize their employees' financial well-being through early wages and emergency loan programs.
1. Instant credit
Empower your workforce with Instant Credit, a hassle-free digital loan application process. No more waiting in queues or dealing with lengthy paperwork. Extend this benefit to all employees, including those with no credit history. Employees can tailor their repayment schedule with flexible tenure options ranging from 3 to 36 months. Enjoy great offers like a 75% processing fee discount for the first transaction and enticing gift vouchers.
2. Early wages
Ensure your employees have the financial flexibility they need with Early Wage Access. Provide them with early access to their earned wages at zero interest between pay cycles. This not only helps employees manage unplanned expenses but also contributes to higher productivity and a stress-free work-life balance. The result? Happy employees and a delighted HR team with no additional liabilities or costs to the company.
3. Loan categories
Empuls understands that financial needs vary. Whether it's planned or unplanned expenses, emergencies, or personal milestones, employees can utilize Early Wages and Instant Credit for various purposes:
- Bike & Car
- Electronics & Gadgets
- Engagement & Wedding
- Medical Emergencies
- Education & Upskilling
- Home Renovation
- Travel & Vacation
- Home Appliances
- Kitchen Appliances
Benefits for HR and employees
- HR Benefits: Demonstrate your commitment to employee well-being by enhancing your benefits package. Empuls helps HR teams efficiently manage expenses with zero liability to the company and no impact on working capital. It's an excellent tool for talent retention and attraction.
- Employee Benefits: Empuls ensures a 100% digital process with approval in just 5 minutes. Quick cash transfers directly into employees' bank accounts provide immediate relief. Enjoy early access to earned wages multiple times a year, with no credit checks and access to interest-free cash.
Empuls is the key to unlocking financial freedom for your employees. By implementing Early Wages and Loan Programs, companies can enhance their benefits package, show genuine care for their workforce, and contribute to a stress-free and productive work environment. Talk to our experts today and take the first step toward a financially empowered workforce!
Endnote
As a new employee, you can face difficulty finding lenders. Finding yourself in a financial emergency is stressful, but luckily, you have several options. If you have a good credit score, you can take out a personal loan.
However, even with bad credit, you can get payday loans to finance your emergency. Some companies have employee loan options that work similarly to payday loans. Check with your boss if you can get one. Remember to research your lender well and avoid an endless debt cycle.
