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Personal Loans For Self-Employed
A personal loan for self-employed is a specially designed personal finance product exclusively for self-employed customers. You may be a professional such as a doctor, architect, chartered accountant, or a consultant with your own registered practice, or can operate as an independent contractor.Personal loans are a great way to fund your immediate financial needs. They are unsecured loans that do not require any collateral. They have zero end usage restrictions and can be used for anything like weddings, medical emergencies, etc.
About Personal Loans for Self-Employed
- Purpose of personal loans for self employed
- Key Lenders Offering Personal Loans For Self Employed
- Features and Benefits of Personal Loans For Self Employed
- Eligibility Criteria For The Self-Employed Personal Loan
- Documents Required For Self-Employed Loans
- How To Apply For A Personal Loan For Self Employed
- Factors Influencing Personal Loans For Self Employed
- Conclusion
- Personal Loans For Self Employed
Purpose of personal loans for self employed
Self -employed individuals who own a business either as a sole proprietor or professional, need money to start and run their business. For this purpose, they take a personal loan. This loan is taken mostly without security. Personal loans are given to self-employed, salaried and non-salaried individuals. Documentation and interest rates in each case will differ.
Banks have strict rules when it comes to providing loans while NBFC’s are more flexible but have a higher rate of interest than banks. NBFCs and other private lenders may offer loans to individuals with low credit score but they may demand higher collateral as well as interest.While the source of loan is a matter of individual’s choice, it is better and safer to deal with an institution that has a proper infrastructure and system in place.
Key Lenders Offering Personal Loans For Self Employed
Lender | Interest Rate | Loan Amount | Loan Tenure |
|---|---|---|---|
Starting from 10.50% | Upto 40 Lakhs | 1 to 5 years | |
Starting from 10.49% p.a. | Upto 40 Lakhs | Upto 5 years | |
Starting from 10.49% p.a. | Upto Rs. 50 Lakhs | 1 to 6 years | |
10.75% p.a. to 16.49% per annum | Upto Rs. 30 Lakhs | 1 to 5 years | |
10.75% to 26% | Upto 40 Lakhs | 1 to 5 years | |
Starting from 10.49% onwards | Upto 15 Lakhs | 1 to 5 years | |
Ranging from 9.75% p.a. to 16.00% p.a. | According to the lender’s terms and conditions | 6 months to 60 months |
Features and Benefits of Personal Loans For Self Employed
- Most reputed lenders have a hassle-free application process
- Quick processing time
- They come at competitive interest rates
- The loan amount can be used for personal or business-related expenditures
- Flexible repayment options
- No collateral, security, or guarantor is required to avail personal loans for the self-employed.
- Most lenders are transparent about the loan terms and charges.
- Some banks offer further benefits like personal accident insurance with the loan.
Eligibility Criteria For The Self-Employed Personal Loan
Some common eligibility criteria are specified below. The eligibility criteria may vary across lenders.
Criteria | Notes |
|---|---|
Age | 22 years at least and not more than 65 years |
Minimum annual income | Rs. 4.8 Lakhs |
Work Experience | 4 years of work experience post qualification |
Minimum turnover | Minimum 40 Lakhs for self-employed non-professionals Minimum 15 Lakhs for self-employed professionals |
Age of the Business | At least 5 years. Can be relaxed if the applicant is a doctor |
Few Other Conditions
- Self-employed professionals should have a minimum profit post tax payment of Rs.2 lakh.
- Some lenders may need the applicants to have a relationship with them before applying.
Note: The eligibility criteria varies across lenders.
Documents Required For Self-Employed Loans
Identity Proof | Either one of the following:
|
Address Proof | Either one of the following:
|
Bank Statements | Bank statements of the applicant’s current account for the last 6 months |
Qualification Proof | Highest professional degree must be submitted |
Income Tax Returns | Of the last 2 years with income computation |
Profession Continuity Proof | Professional Continuity Proof |
Age Proof | Age Proof document |
Address Proof of the Applicant’s Office | Address Proof of the Applicant’s Office |
Note: The list of documents given above is general. The documents may vary across lenders.
How To Apply For A Personal Loan For Self Employed
Self-employed individuals can apply for a personal loan through a third party financial services website like CreditMantri, via the lender’s website, or by directly visiting the lender’s office.
Application Process Through CreditMantri
1. Visit CreditMantri Personal loan for more information2. Choose the lender with whom you want to apply for the loan
3. Click on “Check Eligibility”
4. Enter basic details like email ID, mobile number, full name as per PAN, loan amount requested, date of birth, residence pin code, residence city, gender, and marital status.
5. Click on “Next”
6. Proceed with the rest of the steps to finish the application process.
Application Process Through The Lender’s Website
1. Go to the lender’s website2. Key in certain data to check your eligibility
3. Proceed to fill out the online application form and submit it
4. A representative from the bank or financial institution may contact you
5. Proceed as per their instructions and apply for the loan
Offline Application
You can apply for personal loans for the self-employed by visiting the bank’s branch, through SMS, via ATM kiosks, or by contacting customer care.Factors Influencing Personal Loans For Self Employed
- Eligibility Criteria: Make sure that you meet the eligibility criteria set by the lender.
- Credit score: The credit score is one of the most important factors based on which lenders assess your repaying capacity. Since personal loans are unsecured and self-employed persons may not have a steady source of income, lenders look at you as a low-risk borrower when your credit score is good. A credit score of 750 and above is considered really good. You will get personal loans at preferential rates, desirable loan amounts, and many pre approved offers and deals for this credit score.
- Interest Rate: The interest rate is the most important factor that will influence your personal loan EMI. The higher the interest rate, the higher will be your EMI. Interest rates vary across lenders. Thus, compare interest rates and choose the one with a lower rate if the other conditions of the loan suit you.
- Personal Loan Cost: Lenders levy various other costs like processing fees, prepayment charges, penal charges, legal charges, payment dishonor fees, loan rescheduling charges, etc. Put together, these charges can increase the cost of your personal loan. Therefore, make sure to check the other costs, when comparing various personal loans
- Ensure Your Repayment Capacity: Self-employed people may not have a steady source of income. A personal loan for the self-employed is repaid in EMIs. So, ideally, you should compute your EMIs before applying for the loan. A personal loan EMI calculator makes the job easy. All you have to do is enter the amount, interest rate, and tenure. The result is displayed instantaneously.
- Relationship with the Bank: If you already have an existing relationship with the bank, then they may give you lower interest rates on your personal loans. Banks generally give preferential interest rates and offers to customers who have a credit history with the bank.
Conclusion
If you require funds to meet any personal or business requirements, you can take a personal loan for the self-employed. But, check your eligibility criteria and make sure you have all your documents in place before applying for a personal loan for self-employed.
FAQs of Personal Loans For Self Employed
1. How can I use my personal loan for self-employed?
There is no end usage restriction for personal loans for self-employed. You can use it for personal expenses such as medical emergencies, wedding expenses, and holiday expenses. You can also use them for business purposes, such as working capital expenses, marketing your business, expanding your business, payroll expenditure, and purchasing equipment and machinery.
2. What is the maximum loan amount a self-employed person can get?
The maximum loan amount will vary across lenders. It also depends on factors such as credit score, age, income, loan duration, etc.
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