Let’s face it: most everyone needs a little bit more money than they have available to them. Most Americans live paycheck to paycheck and have barely enough money stored away to make it through an emergency.
That’s not even mentioning the money one might need to take advantage of certain opportunities or to start an enterprise such as a small business. This is where loans come in for many people.
You might be wondering: can I get a loan if I am self-employed? Those who employ themselves often run into awkward run-ins with financial institutions and other such traditional entities. How does it all work?
Read on and we’ll walk you through what you need to know.
What Differs When You Apply As Self-Employed?
Many people who are self-employed worry that this kind of status might disqualify them from being eligible for any kind of loan. The good news is that this is not the case and those who work for themselves are able to get loans quite frequently.
At the end of the day, a person’s income and credit score will be the most important elements of a loan application. There is a chance that a self-employed individual might not have as high or consistent income as someone with a salary, but they still could very well earn enough to qualify.
The main difference one might expect when applying for a loan is some of the documentation that will need to be submitted. Proof of income is a big part of the loan application process at almost any kind of financial institution.
Most traditional workers are able to show their income with a simple paystub, but the process is often much harder for a person who is self-employed. They will need to provide evidence from lenders over a much wider scope of time.
This is because self-employed work can be more fickle and most lenders will want to see consistent evidence of income over a long period of time. The consistency of salaried work is not present.
Will a Loan for a Self-Employed Individual Be More Expensive?
There are some who worry that because they are self-employed the loans that will be able to take out will be more expensive. Again, this has little to do with the person’s employment model and everything to do with the income that they make from this work.
Those who make a great deal of money from their self-employed work will probably be able to get a loan at a great rate. Those with less income and who can provide less of an assurance that they’ll be able to pay the money back will receive higher interest rates in many situations.
Of course, it always depends on what lender you’re talking to. There are many lenders out there, such as Bonsai Finance, that will provide affordable loans despite employment status.
You can check it out and see for yourself.
Can I Get a Loan If I Am Self-Employed?
One of the most common questions those work for themselves ask is ‘can I get a loan if I am self-employed?’ While the reasons for this concern are more than viable, there really isn’t too much of a need for it. The above information can help.
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