To work for yourself and start from scratch is an entirely different experience than working for someone else and counting on a set monthly wage. When you embark on that journey, funds are needed at the beginning of and during it, and that’s where personal loans for self-employed come into the picture.
A loan comes in two types:
Secured loans: This type of personal loan requires collateral which is the asset you leave with the lender so in case you fail to repay the loan, the lenders still have a way to get back their money. That is why secured loans are also with low-interest personal loans, as opposed to loans without collateral.
Unsecured loans: An unsecured loan does not need collateral and the risk is taken by the lenders while letting you borrow money from them. However, they check your credit history and creditworthiness before lending the loan. Personal loans are unsecured loans.
What is a personal loan?
A personal loan is a lump sum amount that you can borrow money for your financial needs. In this type of loan, the lender gives a certain sum determined by the terms that are agreed upon, including interest rates, costs, and the repayment schedule. A personal loan is different from other types of loans like home loans and car loans as you are free to use this borrowed money for any kind of financial requirement.
Since we are now clear about the meaning of a personal loan, let’s move on to the question that’s worth asking before you make this leap of faith with any lender:
Now imagine, your enterprise as you have set your business foot forward in and you come to the realization that every buyer-customer relationship is a potential sale. That is why instant personal loans act as useful tool with which you can effectively fight the fluctuations of self-employment.
Personal Loans: Versatility of the Instrument
It helps you conceptualize a personal loan as equivalent to a Swiss Army Knife in your bag of tricks. As with other personal lenders, and as is usually the case with personal loans, loan seekers do not have to secure the loans. This implies that you do not risk any of your assets in the game. However, this ease has its drawbacks, which are that they attract higher rates, which indicate the amount of risk that the financier takes.
The Self-Employed Financial Landscape
Self-employment helps you achieve freedom and that is inevitably followed by a few common financial hurdles that personal loans for self-employed can help address.
1. Income Variability: Your income might have gone up and down over time, which is inevitable when you are self-employed. It also makes it hard to plan for these big expenses or investments to be made in the future.
2. Documentation Dilemma: The typical conventional financial platforms are known to request rigorous paperwork that asks one to prove the consistency of earnings – something that is not extremely easy for most borrowers.
3. Cash Flow Crises: Special events, new businesses, and extra costs can come up from time to time; and this creates cash flow problems since such types of events are unpredictable.
That is why, obtaining a personal loan for self-employed is not for the mediocre. Here is how to approach it:
1. Have Your Own Financial Story: Lenders also, need to be sure that they can be paid back their money, and this is done by offering an interest rate. Gather all records of prior income in the form of tax returns, bank statements, or contracts/invoices of your business earnings.
2. Improve Your Credit Score: Credit is like a recommendation in that the higher the number, the better the score a person has. Despite these tips, minimize credit card debts and utilize your credit card account responsibly and on time.
3. Get a Trustworthy Co-Signer: If you cannot convince a bank about your financial story, then a creditworthy co-signer is just what a bank needs to give you a loan.
4. Highlight Your Business Acumen: Prove your business success with a perfect business plan, an individual and attractive website, and positive feedback from the customers. These elements define your previous achievements and prospects to other members of the community.
How to Get a Personal Loan for Self-Employed:
As you begin with your research on getting the best low-interest personal loans, the first question that you are bound to encounter is how to get a personal loan. Especially for a self-employed individual. While checking personal loan eligibility depends on various factors, the key points to consider are:
Credit Score: Your credit score, or CIBIL score, is a significant factor in determining your eligibility for an instant personal loan online. A higher credit score increases the chances of your application being approved. Many lenders have minimum credit score requirements, and a score of 700 or above is generally considered good for securing a personal loan.
Income and Other Earnings: For self-employed individuals, lenders typically look for a stable source of income to ensure you can repay the loan. This may involve providing documentation such as tax returns or profit and loss statements. Although there is no fixed minimum income requirement, it's advisable to have a monthly income of ₹15,000 or more to qualify for a personal loan.
Residency and Age: You must usually be a legal adult in your country to qualify for a personal loan. Lenders may also require you to be a permanent resident or citizen.
Credit History: Lenders will review your credit history, including previous loans, total borrowed amounts, and repayment history. Each of these metrics can influence the approval of your loan application. Check your personal loan eligibility, you can use various online Personal Loan Eligibility Calculators for better understanding.
Instant Personal Loans for Self Employed:
When it comes to personal loans for self-employed then in most of the cases, it is very easy to get a personal loan for working professionals. However, the bank or the loan lender may require loan applicants to meet certain income or employment requirements.
How much Personal Loan for Self Employed?
The approved loan amount of a personal loan can be based on your salary, your other income, the type of organization that you work in, the duration of your employment, and many more. The loan amount also depends on your creditworthiness as well as the amount of debt that you have taken so far. Additionally, your work sector also plays an important role when applying for a personal loan. A personal loan for a Government Employee and a Personal loan for a self-employed of a private organization can be different. As there isn’t any mention of a minimum salary for a personal loan, based on our research the salary range starts from ₹15,000 per month for getting a personal loan.
You can use the Personal Loan Eligibility Calculator to check the estimated loan amount which can be approved based on your salary and other details.
What are the documents that are required for a Personal Loan?
To get a personal loan for a self-employed person the documents which are required are very basic. Your basic identity proof such as Adhaar card and PAN card and for your income proof the lender may ask you to submit the latest bank statement.
To apply for an instant personal loan for self-employed, you can download the VIVA Money App from the Google Play Store or iOS App Store, and with a few steps, you can apply for an instant personal loan for self-employed.
How long does it take for an Instant Personal Loan for Self Employed to be approved?
Based on your details, you can get the apply for an Instant Personal Loan in less than 15 minutes. With VIVA Money App, the process is very easy, simple, and quick at the same time. After submitting the application, the amount is disbursed in your account in real-time with no delay after all the required details are submitted.
What is the Average Interest Rate for a Personal Loan for Self-Employed?
The average rate of interest on a Personal loan can be as low as 3% and can be as high as 20%. It usually depends on the EMI tenure, your creditworthiness, and other details. Therefore, if you're going for low interest personal loans, you should check all the required boxes.
A low interest personal loan is not just a backup; it remains one of the key levers that can be used to advance your business. Take advantage of its availability as a method to finance business development to pay for necessities or repay existing liabilities. Thus, if used wisely, your loan is a powerful tool that will allow achieving new goals and build a protective shield around your financial activities.
Conclusion:
It is entirely possible for the self-employed to obtain a personal loan; however, it may prove a little challenging as compared to the employed candidates. Therefore, knowing the environment, being ready to offer your best, and choosing the correct lender, can get the required financing for growth. Step into the world with confidence, take control of your finances, and watch your entrepreneurial dreams come true.
