Personal Loan Eligibility For Self-Employed People

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Personal Loan Eligibility For Self-Employed

Many people prefer being self-employed as it gives an individual with wings to express themselves fully. The efforts translating into direct reward model appeals to everyone. However, there are some challenges as well and being self-employed is not all rosy. One such challenge is finding options for credit. As a self-employed does not have a fixed source of income, banks find it bit difficult to provide them with loans. Stills there are a few personal loans available for the self-employed and if they prove their creditworthiness the doors of credit are all but open.

Personal Loan Eligibility For Self-Employed

To be clear about this, let us understand the personal loan and the eligibility of personal loans.

Personal loans

Personal loans are unsecured loans ( unsecured loans here means that they are not secured against anything). They are used to meet the financial requirement of an individual. Personal loans involve great flexibility in use at the amount disbursed from the personal loans can be used for any legal purpose. Personal loans can be used to give the initial funding to one’s business, expand the ongoing business, finance the travel, car, education, wedding and several other purposes.

The no collateral feature of the personal loans adds to its attractiveness. Most often then not people do not own any security to take a loan against, personal loans act a saviour and help one sail through the tough sea of managing finances in times of need. Personal loans can also be availed against by self-employed.

Personal loan eligibility for a self-employed.

Most banks and financial institutions due to the nature of self-owned business are a bit cautious while providing loans to the self-employed. This results in a rigorous documentation process, and banks try to create no scope of any possible loophole. Self-employed eligibility involves:

Citizenship 

The first step to ensure personal loan gets approved is providing the relevant documents to show that the borrower is an Indian citizen. An individual can provide documents like the passport to prove their citizenship.

Minimum age 

If an individual is self-employed, then he should be at least 23 years old to be eligible for taking a personal loan.

Maximum age 

The maximum age for an individual to be eligible for a personal loan is 65 years; most banks do not provide personal loans beyond this age.

Experience

The ability of an individual to repay a loan is of utmost importance to the banks and financial institutions. Banks can easily gauge the ability of the salaried individual by taking into account the salary of an individual but as there is no fixed salary in case of self-employed banks checks the income tax filings and profit and loss account to get a fair picture of individual’s ability to repay the loans. Banks ask for a minimum of 3 years of IT filings and Profit and Loss account statements.

Registered office 

A self-employed borrower must have a registered office to getting the personal loan approved. However, if the registered office does not exist then the house registration document will act as an alternative. personal loans are unsecured loans, and the credits will not be against the property )

Bank account

A self-employed individual is required to have a bank account for a minimum of 1 year with the bank where he is willing to apply for the personal loan.

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Personal loans are the unsecured loans as they are not secured against anything, unlike the loan against property or home loans. Personal loans help an individual in meeting the financial requirement. It can be used for a variety of purposes like financing a wedding, car, education and several other purposes. 

Self-employed individual refers to those individuals who have their own business. They most often do not have a fixed source of income as their income keeps on changing according to the market. As self-employed individuals do not have a fixed source of income banks and financial institutions are a bit more cautious in granting loans to them.

 The eligibility criterion for a self-employed to get personal loans are :

  1. The borrower is required to provide the relevant documents to prove citizenship.
  2. If an individual is self-employed, then he should be at least 23 years old. 
  3. The maximum age for an individual to be eligible for a personal loan is 65 years.
  4. Banks ask for a minimum of 3 years of IT filings and Profit and Loss account statements to gauge the payback ability of an individual.
  5. A self-employed borrower should provide the documents for the registered office or house to getting the personal loan approved. 
  6. The borrower is required to have a bank account for a minimum of 1 year with the bank where he is willing to apply for the personal loan.

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