How Can Self-employed Individuals Get Personal Loans?

By Author: Shashank Bhaskar
Total Articles: 63
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For a long time, self-employed people had to face disappointment that was caused due to multiple Loan rejections. Most lenders would not consider offering Personal Loans to them due to the lack of fixed monthly income. However, things are changing today, with several youngsters becoming freelancers and entrepreneurs. Lenders are now offering a Personal Loan for the self-employed. They get passed with minimal documentation.
If you pass the lender’s eligibility criteria and have a good credit score, they sanction your application without any hassles. Here is how to go about the application process.
Research lenders
Both banks and NBFCs offer Instant Loan for the self-employed, but it is in your interest to check all the potential lenders before approaching one. Compared to NBFCs, banks offer the lowest Personal Loan interest rates. Do this research with a simple Google search to find the top banks around you or even the country that provides the Loan you want and compare the interest rates.
Determine ...
... the tenure
After short-listing the lender, decide the term. A Personal Loan is available for tenures that last up to five years. Most self-employed professionals opt for higher tenures but increase interest rates. On the other hand, opting for short tenures gets you lower interest rates but increases the monthly payable Equated Monthly Instalments. It is best to opt for two to three-year terms to benefit from pocket friendly EMIs at affordable interest rates.
Familiarise with the documentation process
Most banks also sanction Loans instantly, and the amount gets disbursed into your account within 24-48 hours. But to reap this benefit, provide all the required documents listed in the application form. Some banks even offer Loans without documents for self-employed. They merely ask for your details and credit scores to gauge your credit history and repayment behaviour.
Submit relevant documents listed
Proper documentation goes a long way in speeding up the entire Loan process and even helps you negotiate the interest rates. While most lenders consider that you are self-employed and may not have enough income proof, they verify documents such as your bank statements, income tax returns of the last three years, rental income proofs, and more to determine your repayment capacity. They also require your PAN Card, ID and address proofs.
Whether it is Personal Loan for salaried or self-employed, lenders allow you to apply for one online. Simple download the application form as per the borrowers’ category you fit into, fill it up and attest the documents listed to start the application process. The bank may even send a representative to your home to collect the documents.