Personal Loans For Self Employed With No Proof Of Income

Personal Loans for Self Employed with No Proof of Income:

Personal loan for self employed is a type of loan that is offered by most banks. While sanctioning the loan, borrowers must mention the purpose of the loan. Consequently the interest rates charged on these types of loans are higher than loans for salaried borrowers. The rates of interest on personal loan for self-employed varies from 13.5% to 22% a year. The loan amount advanced for personal loans can be used for any personal expenditure like home renovation, vacation, medical expenses, cosmetic procedures, marriage expenditures and other expenses.

Personal Loan Eligibility for Self Employed:

There are some common eligibility criteria for a personal loan for self employed. The eligibility criteria vary across banks. Mentioned below are some general eligibility criteria for self employed personal loans:

• The applicant must be a Resident of India.
• The applicant must fall within an age bracket of 21 to 60 years.
• The applicant should be in the same business for at least 3 years.
• The applicant must have an account in the bank or must be an existing customer of the bank.

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Personal Loans For Self Employed With No Proof Of Income

Personal Loan for Self Employed Interest Rates:

The personal loan for self employed comes at a higher interest rate than other personal loans. As these loans are given to self employed the bank might ask for collateral. The rates of interest vary from 13.5% to 24% a year and depend on the amount of loan sanctioned and the credit score of the borrower.

Documents Required for Self Employed Personal Loans:

The documents required for self employed individuals to avail a personal loan are listed below:

• Passport sized photograph
• Duly filled application form
• Proof of residence
• Age proof and identity proof
• Bank statement of last 3 months
• Last 6 months updated bank passbook
• Income proof like income tax return of the current year or balance sheet of previous 2 years.
• VAT returns and GST registration number
• Business existence proof – service tax registration, business address proof or incorporation details in case of company/ partnership

As the document requirement varies from bank to bank, the bank in its capacity may ask for additional documents if deemed necessary.

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Personal loan from Banks and NBFC for self-employed:

The self-employed can easily avail personal loans from banks and NBFCs without any hassles. While providing loans to self employed, banks follow strict rules and some of the banks provide these loans only to individuals with a good credit score. On the other hand the NBFCs are more lenient with requirements, when providing loans to the self employed. However, the non-banking companies charge a higher rate of interest compared to banks when it comes to personal loans.

Personal loan for self employed with bad credit:

While applying for a personal loan, an individual must have a good credit score. A bad credit score can reduce the chances of a personal loan getting approved. However it is still possible for self-employed borrowers to avail a loan with a bad credit score. The banks in this case do not provide unsecured loans and generally asks for collateral to be submitted as security against the loan. The amount of loan sanctioned by the bank depends on the collateral submitted by the borrower.

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Factors Affecting Self Employed Personal Loan Rates:

Listed below are some of the factors that can affect the rates of the personal loan:

• High credit score: A credit score acts as a validation on how you have performed in the past with the payments of previous loans and credit cards. For each payment made against your previous loan in time, you add points to your credit score. However, any late payments or defaults can result in bringing down credit score. A credit score above 750 is considered to be a good credit score. A high credit score can help you get a personal loan at lower interest rates.
• Higher income: The bank provides lower interest rates to borrowers having good income. The businesses or self employed individuals who have a steady source of income are most likely to pay off the loan and have minimum chances of default. The interest rates vary for each individual borrower, but a good/ high income can help individuals avail a loan at lower interest rates.
• Good relationship with the bank: the individuals who are existing customers of any particular bank can also avail loans at lower rates of interest. As the daily business transactions of these individuals are related to the bank, the bank has a history of the credit score of the individual as well as the repayment records. If the customer has maintained a good relationship with the bank in the past, then the banks offer loans at lower interest rates and sometimes without any collateral.

Features and Benefits of Personal Loan for Self Employed:

Given below are some of the features and benefits of personal loan for self-employed individuals:

• No restrictions on how the loan can be used.
• Quick processing and approval of personal loans.
• These loans are generally unsecured but the applicant must provide collateral in case of bad credit score.
• Simple process of documentation
• Transparency
• The loan amount depends upon the repayment capacity of the borrower.
• Some banks offer additional benefits like personal accident insurance with the loan.
• Competitive interest rates.
• Some banks also do not charge processing fees on the credit offered.

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