A personal loan can be used for almost any purpose, from debt consolidation to starting a small company. But it can be challenging to qualify for an unsecured loan when you're self-employed because lenders want solid evidence of income before approving financing application.
The great news is, there are still choices for individuals who work with themselves to have a personal loan. However, you might want to jump through additional hoops first if that's your projects situation.
Here's what you need to know about getting approved for a loan if you're a self-employed individual. You can get a head start by visiting a marketplace like PayPasser to check out prequalified rates and compare unsecured loans and without having affected your credit rating.
While there are different types of unsecured loans and individual loan lenders their very own qualifying requirements, most financial institutions will require you to give a few key pieces of information throughout the application. This can include:
- Your personal information, as well as your name and address
- The amount you need to borrow and your reasons for taking the loan
- Your Social Security number so lenders can check your credit
- Information to verify income
- Your employment details, including who your present employer is and just how long you have been on the job
- Details about other outstanding debt, including loan balances and monthly payments
Lenders think about this information to determine if, as a self-employed applicant, you're a well-qualified borrower and to measure the chance of loan approval.
With PayPasser, you are able to compare personal bank loan rates and terms from multiple lenders all-in-one spot.
If you are self-employed, you might not have traditional financial statements like pay stubs or W-2s to provide proof of income. And you may not have a business you're employed for your can verify your employment status. Consequently, your lender asks for other proof of income. This can include:
- Two years of tax statements, as well as your Schedule C and Schedule SE that provide more insight into business income and obligations
- Bank statements
- 1099s from companies that paid you in the last two years
Depending how consistent your earnings are, personal bank loan lenders may not provide credit for all the income you earned like a self-employed individual. This can affect the amount borrowed you're able to borrow.
In general, the more you've been self-employed with a steady income, the better your chances of qualifying for any personal loan when you be your own boss.
With regards to personal loan shopping, PayPasser can perform the heavy lifting for you personally. With the click of a button, you can compare your top chioces in unsecured loans and rates without affecting your credit rating.
Whenever are applying for a personal bank loan, you need to borrow the minimum amount you have to accomplish your personal finance goals. In case your aim is debt consolidation reduction, for instance, then borrow sufficient to repay the present charge cards or loans.
Remember, the greater you borrow, the larger your monthly payments will be and the more difficult it will be to settle your loans. Use a personal loan calculator to see how high your monthly obligations could be with different loan balances.
Your rates also impact your payment, so visit PayPasser to get the best personal bank loan rates.
Whether you're applying for an unsecured loan to have an emergency, do it yourself project or another reason, you'll want to take a few key steps to maximize your odds of getting your loan application approved. To do that:
- Aim to improve your credit rating by repaying other debts before applying for a personal bank loan and ensuring you don't miss any payments or apply for too much new credit at once.
- Avoid changing jobs or reducing your income right before trying to get your personal loan.
- Compare personal loan lenders to see which provides the best rates. Try to shop around with a minimum of three different personal bank loan lenders because there could be a lot of variation in rates and terms.
- Get pre-qualified for a personal bank loan before you decide to move forward with borrowing, there will not be any surprises in terms of the rates you're entitled to.