Being self-employed comes with a sense of freedom and confidence. However, there might be instances where you may find yourself struggling to manage your finances, and that’s completely normal. In situations like these, a personal loan can be a worthwhile solution to consider. They are a quick and hassle-free option for financial assistance.
In this blog, we will understand why a personal loan for self employed individuals has become a favourite for many people and what exactly the requirements are.
Why has a personal loan for the self-employed become a go-to choice?
A personal loan is a financial tool that offers quick, instant financial assistance so you don’t have to wait for days. Such loans are flexible and can be used for multiple purposes, like home improvements, education, marriage, travel, and more.
Here are several benefits of a personal loan for self employed that make this financial option a go-to choice:
No Collateral: The first and most important concern that comes with applying for an instant online loan is collateral. Not everyone is comfortable pledging their assets in order to get financial help. This is where a personal loan comes in, as it's an unsecured loan that doesn't require collateral.- 100% digital application: The best part is that today’s instant personal loan app offers a fully digital, online application process that can be completed from the comfort of your couch. They save you from the hassle of standing in long queues.
- Useful for different needs: A personal loan usually doesn't have to be linked to one specific purchase. For instance, if you are a business owner, you can use the personal loan for businessman to fulfil your business commitments, like purchasing inventory or raw materials.
What are the eligibility criteria for a personal loan for self employed individuals?
Eligibility is not based only on whether you own a business or you have sufficient funds. It is more than that. Mentioned below are several details that affect eligibility for personal loans:
- Age: Prefr's eligibility criteria range from 21 to 55 years. However, age requirements can vary by lender, so check the applicable personal loan eligibility criteria before applying.
- Monthly income: Your income helps a lender understand whether the proposed EMI is manageable. At Prefr, we offer instant loans with a minimum monthly income of ₹15,000.
- Credit score: Your credit history gives lenders an idea of how you have handled previous credit. Prefr follows a minimum credit score of 650. However, remember that a higher score may support your application, but approval isn't based on the score alone.
- Stability of income and capacity for repayment: Income from self-employment can fluctuate. Lenders can therefore review your transactions, income statements, and repayment history to gauge your financial standing.
If you are searching for personal loans for self employed with no proof of income, do bear in mind that “without proof of income” does not mean “without any financial background check”.
What documents are required to apply for a personal loan?
The exact documents can differ based on the lender; however, for self-employed applicants, business owners and freelancers, these are the documents that are commonly asked for:
| Document | Self-employed |
|---|---|
| Identity proof | PAN and Aadhaar |
| Address proof | Aadhaar, utility bill or rent agreement |
| Income proof | Last 6–12 months' bank statements |
| Bank proof | Business vintage proof, ITR where asked |
How does one apply for a personal loan?
Applying for a loan online is easy and straightforward, and you can do it in a few simple steps, which makes it even easier for people with hectic schedules. Let’s take a look:
Step 1
Verify your eligibility
Begin by checking the lender's personal loan eligibility requirements. Check the age, income, and credit score criteria before you apply for the instant loan.
Step 2
Have your documentation in order
Keep your identity proof, bank statement and any other income-related document handy. This makes verification less tedious for you.
Step 3
Fill the application form
Carefully fill in your personal, income, and financial information in the application form. With an online loan application, you could apply and get verified online in a few minutes.
Step 4
Evaluate the offer
When an offer comes to you, do not consider only the amount of the loan but also the interest rate, EMI, tenure, and other charges involved. This will give a complete idea of how much you have to pay.
Step 5
Set up repayment
Register an e-mandate, usually eNACH, authorising automatic EMI deduction from your bank account.
Step 6
Sign and disburse
Sign the loan agreement online, and then the loan moves to disbursal. With Prefr, the disbursal takes around 30 minutes. However, sometimes it can also take around 24 hours, depending on your lending partner and your bank's processing.
Wrapping Up
Self-employment should not be a factor that makes taking a personal loan seem overly complicated. The most important thing is that you should know your finances well and understand your income and credit history.
If you are applying for a personal loan for freelancers or self-employed individuals, we at Prefr offer loan amounts up to ₹5 lakh at interest rates ranging from 18% to 30% per annum, with tenures ranging from 6 to 60 months. We offer quick disbursals and ensure you get timely financial assistance.
Frequently Asked Questions
Can I get a personal loan being a self-employed person?
Which loan is the best for self-employed people?
Is a 700 a bad CIBIL score?
Can I get a personal loan with an income of ₹35,000?
How can I know about my loan eligibility?
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