People employed by others can get loans easily as they can submit proof of their income which would indicate that that they can make timely loan payments. But for the self-employed, this could pose a problem as they do not have any salary statement. In fact, the self-employed are generally granted loans at higher rates of interest as the lender may feel that he’s taking a risk by lending to them.
Self-employed people need to keep certain points in mind when applying for loans in order to get the best possible rates:
A self-employed person would have to first summit the following documents-
There are self-employed loan deals where the interest rate is reduced after a certain period if the lender is satisfied that the borrower is making timely payments. Self-employed people can look for such deals.
Another way for a self-employed person to get a loan with reasonable terms is by providing proof to the lender that he is making timely payments on his other loans and bills. This would reassure the lender that the borrower indeed has a regular source of income.
There are many lending websites which display tables of the rates offered by different lenders. Also, on entering one’s details, one can also know the rate that would be charged by the lenders in that particular website network. The borrower can compare terms and select the lender who offers the best loan rates for the self-employed.
Though a self-employed person may be earning handsomely, he would still need to take some trouble to show that he is earning a regular income.