Being the master of your own world sounds great, but self-employment has its share of challenges too. If you are self-employed and need urgent cash, a Personal Loan can come to your rescue. Yes, you read that right! Approval of Personal Loans for self-employed individuals is not as tough as people assume it to be.
Here’s your guide!
What are Personal Loans?
Personal Loans are unsecured loans borrowed from a lender. You have to make timely repayments of the loan amount in fixed quantum, as previously agreed upon in the terms of the loan. But Personal Loans are far more attractive than any other loan because of the flexibility they offer.
What makes Personal Loans flexible?
A Personal Loan is flexible as you can use the money sanctioned in the form of loan, for anything you need. In terms of flexibility, Personal Loans are way ahead of other loans such as a Home Loan or a Car Loan. While a Home Loan and a Car Loan can only be used for their specific purpose, you can use a Personal Loan for anything you want.
You can apply for the loan in case of a liquidity crunch and can use the loan amount to solve any problem such as a family emergency or wedding expenses.
Personal Loans are non-collateral loans which means, you do not have to produce any collateral to get the loan approved and disbursed.
Can self-employed people apply for Personal Loans?
Yes, self-employed people are also eligible for Personal Loans.
Personal Loan Eligibility criteria for self-employed people
Self-employed individuals who apply for a Personal Loan from a bank have to go through a rigorous documentation process. If you are a self-employed individual and are planning to apply for a Personal Loan, here’s what you need to know for your loan to be sanctioned:
- Citizenship: The first and the foremost thing that you need to have before getting your Personal Loan approved by any finance institution is your citizenship status as an Indian. You can get a Personal Loan only if your nationality is Indian.
- Minimum age: Any self-employed individual above 23 years of age is eligible for a Personal Loan.
- Maximum age: A self-employed individual is eligible for a Personal Loan only till 65 years of age.
- Experience: Self-employed individuals are not like salaried people who have a regular and constant source of income. Income of a self-employed individual can fluctuate depending on the business. Hence, in order to be eligible, a self-employed individual needs to have been in his/her current business for at least 3 years or more and is a regular Income Tax payer.
- Office: If a self-employed individual wants a Personal Loan, the person should have an office registered under his/her name or under the name of the owned business. If you do not have a registered office, your house registration papers should suffice.
- Bank account: You have to be a customer of the lending bank for at least a year to be eligible for a Personal Loan. Some banks require an even longer time period of association with them.
Interest rates:
Interest rates on Personal Loans differ from lender to lender, but the current interest rates in the market for Personal Loans are in the range of 16%-26% for the self-employed. You can even negotiate the interest rate with your lender, but the approval depends on your Credit Score.
Though self-employed individuals might find it difficult to show a regular stream of income in order to avail Personal Loans, this does not mean that they cannot get one. Loan applications are accepted based on your Credit Score and repayment history. Thus, if you have been regular with debt payments, getting a Personal Loan application approved is not that difficult.