- The Banks always play safe in their court and may disapprove the loan application for the self employed, while there are high chances that you will get an approval for the personal loan through any NBFC.
- While, the interest rate for the banks is lower than the NBFCs, the NBFCs charge a higher interest rate as compared to banks, when it comes to the personal loans.
- When it comes to the banks, the self employed individuals must carry a good CIBIL Score under their report, the NBFCs might consider approving for the personal loans, even below at pat CIBIL Score.
Personal Loans for the self employed with Bad CIBIL Score
Having a bad CIBIL Score is never a good thing, if you consider taking a loan of any kind. While, it creates a feeling of uncertainty within the minds of the banking professionals over the approval of any kind of a loan, the chances are that you might end up losing your approval for loan, even if it’s personal loan or a home loan. But, don’t lose heart! There’s still a possibility that the person having a bad credit score can get an approval for the personal loan.
There’s always a door open in our country and when it comes to the personal loans, it’s no exception. Self employed individuals having a bad credit score can opt for the loans through no credit check loans or a secured personal loan. The secured personal loans, as the name suggests is the secured type of personal loan, where you need to put a collateral for the personal loan, you avail. So, what’s the benefit?
- Since, you are offering collateral; the chances are high that you end up getting a personal loan in your account.
- Since, you are offering collateral at your loan; the banks will not hesitate in approving your personal loan application, at all!
- With the timely payment of your EMIs, you end up collecting some good reward points in your credit score, which will help you in getting a personal loan in the future, without putting any collateral!
Features of a Personal Loan for Self Employed
Below are the Features of a Personal Loan for the Self Employed
- No Collateral required
- Simple Documentation
- Flexible Loan Tenure availability ranging from 1 year to 5 years
- Transparency in the process
- Quick disbursal of Loan
- Complete freedom over how to spend loan amount
- Competitive interest rates
- Loan Amount depends upon the repayment capability of the person
- No processing charge (in some cases)
- Several other benefits (depending on banks offers)
Some limitations of the Personal Loan for Self Employed
Below are some limitations of a Personal Loan for Self Employed:
- Higher interest rates as compared to other loan types
- No part payments
- In most cases, a Good CIBIL Score is required
- Bank Account is compulsory
- Late Payment Penalty applicable as in other loan types
Personal Loan for Self Employed
While, a lot has been discussed, there are many more in our discussion kitty! When it comes to the self employed, the individuals are divided into 2 categories, which are listed below:
- Self Employed Professionals: The banks categories self employed individuals into two categories; one is the self employed professionals, under which the doctors, surgeons, dentists, who are practicing from their own clinics along with the Chartered Accountants, Architects, Interior Designers, and Consultants comes.
- Self Employed Non Professionals: All rest individuals who don’t come under the Self Employed Professionals come under the list. These may include Self Employed Non Professionals, who are into the manufacturing, services, trading businesses.
Eligibility Criteria of Personal Loans for Self Employed
While, the eligibility criteria differs banks to banks, and from NBFCs to NBFCs, below is the eligibility criteria needed for the Personal Loans for Self Employed Individuals, generally:
- A Person must be a self employed individual
- The applicant should be from 21 years to 65 years
- The applicant needs to have filed ITRs for a minimum of 2 years
- The annual income should be more than 5 lacs (However, it depends on the city, the applicant is living, and thus the minim income may decrease or increase)
- 6 Months of Bank Statements denoting the average bank balance and transactions
- A CIBIL Score of more than 650 (However, there are various NBFCs, which approve Personal Loans below this score).
Documentation Required for Personal Loans for Self Employed
Below are the set of documents required for Personal Loans for Self Employed. However, keep in mind that the Documentation list may differ depending upon the eligibility criteria, as laid down by your lender:
- Identity Proof
- Address Proof
- ITR Documents of a minimum of 2 years
- Last 6 Months Bank Statement
- usiness existing Proof (if applicable)
Where can you spend your Personal Loan Amount?
So, if you are ready to take a personal loan, you may be delighted to know that you may spend the loan amount, at whatever, you want to spend on. However, we still recommend you to spend the amount, responsibly, as the amount borrowed is to be paid back to the lender. Also, calculate all your expenses and needs, and only decided to apply for the Personal loan, if there’s no other way. Below is the list of some of the tasks, you may spend your loan amount at:
- To Cover Wedding Costs
- For a Trip
- To Buy Household items
- To Cover Educational needs
- To Cover Medical bills of yours and family
- To Cover Medical bills of your pet
- To Purchase a Car
- For Business Expansion or startup
- For Debt Consolidation
- To Pay off Credit Card Bills
- And all other tasks, you would like to spend on!
EMI for Personal Loans for Self Employed
When it comes to the EMIs for the Personal Loans for the Self Employed, there’s apparently no difference in how Personal Loans for Salaried and Personal Loans for the Self Employed works. The EMI depends on the following factors:
- Loan Amount: The more you borrow, the more is the EMI each Month. The EMIs depends on the three factors, among which the Loan Amount is the one. Also, remember that the Loan Amount, you will be sanctioned completely depends on the factors, like Your Age, Income, CIBIL Score and your repayment capability.
- Loan Tenure: The more is the loan tenure, the less is the EMI you have to shell out each month. However, remember a fact that the longer is the loan tenure, the more you need to pay as interest on the loan amount, you borrowed.
- Interest Rate: A deciding factor, in any loan, the interest rate decides the EMI a person will be covering each month. The more is the interest rate, the more is the EMI. The less is the interest rate, the less you will be paying as interest and EMI, each month. Also, remember that you have every right to negotiate on the deals and offers of the bank and you can ask for the better deal in terms of interest rate and loan amount from your bank. Negotiation is your right and you can avail it when it comes to the interest rate.
Explore other Options before applying for the Personal Loans
The Personal Loans for the Self Employed are a situation saver in most cases. When it comes to the emergency needs, a person can opt for the Personal Loans from any good and chosen Lender. However, what, every one of us should remember is that the loan of any kind should be availed only when the situation is very urgent and when the things are going out of your hands. The Personal Loans just for the enjoyment and all must be avoided, as every penny you are borrowing from a bank, must be paid back with the interest. Thus, it’s better if you are well prepared before in advance and limit your expenses.
Try to figure out your expenses and savings, and always keep emergency funds with you. Remember that the personal loans are dearer loans and the interest rates on personal loans are towards the higher side. You may avoid taking a personal loan, and instead borrow money from your friends, family and any other support hands. Availing a personal loan should be the last resort! Try restricting taking a personal loan just for the pleasure and to buy things, which are really never needed. Still, if you made up your mind on availing a personal loan, what are you waiting for? Take a step further!