Being self-employed and running your business typically provides a lot of freedom and fulfilment. However, it also has unique financial challenges for self-employed individuals. They may face problems like unpredictable expenses, irregular cash flows, etc., which could stress their finances. This is when a Personal Loan can be helpful for self-employed individuals.
Let us examine its features and advantages and understand the factors that could affect its interest rates.
Overview of Personal Loans for self-employed individuals
A Personal Loan for self-employed provides quick access to funds. This gives self-employed individuals the financial boost to effectively manage personal and business expenses. This Loan is multipurpose. There are also little to no limits on using the borrowed funds. A few reasons self-employed people should consider Personal Loans:
- You can use the funds to cover the immediate needs of your business, like unexpected repairs, overheads, etc.
- You can also use the money from this Loan to cover personal expenses, such as funding a wedding, family vacation, etc.
Features and benefits of Personal Loans for self-employed
The various features and benefits of a Personal Loan for self-employed include:
- When you choose a reliable lender for this Loan, you get access to up to Rs. 10 lakh without any collateral.
- Some lenders let you apply for a Personal Loan online from anywhere and anytime. They may also have a 100% paperless application process.
- When you choose a suitable non-banking financial company, you might get attractive interest rates starting at 13% per annum.
- The Loan usually requires little documentation.
- You could also get flexible repayment tenure of up to 60 months.
Factors influencing interest rates of Personal Loans of self-employed
Today, you can conveniently apply for a Personal Loan for self-employed individuals online. Alternatively, visit the nearest branch of your chosen lender and apply for it offline. When doing so, remember that the interest rates are affected by multiple factors:
- Credit scores
You should ideally have a credit score of 750 or higher.
- Relationship with the lender
When you have an existing relationship with your chosen lender, you might get preferential interest rates on your Loan. However, you need to meet their other eligibility requirements.
- Age
Some lenders may need you to be over 25 when you apply for this Loan. On the other hand, you should not be close to 65 when the Loan matures.
- Debt-to-income ratio
Lenders typically prefer a low DTI ratio of 30% or less.
- Business
You should not engage in a business your lender may see as risky.
Conclusion
Personal Loans for self-employed individuals can offer quick access to funds. They could provide the financial support and flexibility to cover business and personal expenses. They also offer multiple benefits. However, research and select a reputed lender when applying for a Personal Loan for self-employed professionals.
