The primary criteria that any bank looks at when disbursing unsecured personal loans is the credibility and repayment capacity of the individual applying for the loan. In this regards there are separate criteria for salaried and self employed people. Due to the inherent security and stability associated with the salaried class the norms are quite relaxed for them However in case of the self employed people the bank needs to take extra precautions to ensure that the amount given as loan is safely returned with the due interest and there is minimum defaults on the loans.
The Banks Position
The bank or any other financing institution requires that the self employed person prove his financial credentials by depositing the requisite documents showing the income and tax returns filed thereof for the last 3 years. In additional the complete financial audit of the enterprise being run by the applicant along with the bank statement of last 6 months have to submitted while applying for the loan. The ultimate motive of the bank is to make sure that the applicant is in a position to repay on time.
The Age Criteria
While for salaried people the minimum age for getting a personal loan is 21 years this has been increase to 25 years for elf employed people by most of the financiers. The rationale behind this difference is that self employed people require more time to stabilize their business and reach a sound financial position. But in case of the maximum age of personal loans the salaried people who retire early have a corresponding age limit of 60 years whereas self employed people who are believed to be earning till late have maximum limit of 65 years. The self employed people are considered to be under no compulsion for retirement as they own their businesses so can continue earnings till later stages which make them eligible for repayment of the personal loan.
The Stability of Employment
In this regard also the self employed people are slightly disadvantaged as compared to the salaried people. Whereas salaried people need to have a total of 2 years of working experience and minimum of 1 year in the current job, the self employed need to have a total of 5 years of experience in their business with a minimum of 2 years in the current profession. The logic behind this discrimination is the same as before – self employed people require more time to settle down financially whereas salaried people have the security of monthly income which makes them more suitable for undertaking regular repayment of the Personal Loan EMIs. The EMIs calculate with Personal Loan EMI Calculator.
Thus one can see that the requirements for self employed people while availing a personal loan is much more stringent as compared to the salaried class. However depending on other factors such as family financial back ground and level of success in own business some of these restrictions can be waived off by the local sanctioning authority of the financing institution.