Personal Loans for the Self-Employed: How It Works
Whether you need fast cash or on a bind, pulling out a personal loan can be extremely helpful. When you get a personal loan, you're able to pay for groceries, bills, and other expenses you need to take care of right away.
Personal loans are relatively easy to get. Most of the time, you'll only need proof of employment, payslips, and residential proof, then you're good to go. However, this might be a bit different for those who are self-employed.
When you're self-employed and need to pull out a personal loan, you need to prove that you own 25 percent of your business, you're a freelancer or contractor, and your wages come from dividends or interests. Besides that, there are other requirements that you need to consider, which we'll discuss further in this article.
Personal Loans for the Self-Employed
When you want to apply for a personal loan as a self-employed individual, there are a bunch of forms you need to complete, and with that, there are different loan types you can consider.
Co-Signed Self-Employed Business Loans
When you get a co-signed loan, this means that you have a co-signer that will add their name to your loan to assure the bank that you'll be repaying the loan.
When you get a co-signed loan, it'll be your responsibility to apply for the loan. The co-signer will only have to sign off on the loan contract and other paperwork you have to do before you sign off on loan. And if you're unable to pay the loan, the bank will reach out to your co-signer.
Another great way to borrow a small amount and still have a good credit score is by utilizing your credit card. Thankfully, credit cards have smaller limits, so the best thing to do is not go over the limit and pay what's due right away.
Payday Self-Employed Loans
Payday Self-Employed Loans can be a bit risky; it's one of the few times you're using your future income as collateral. The reason behind this is that you're using your future income as collateral.
Payday Self-Employed Loans are not meant for a long-term solution, and they're not recommended for someone who's trying to get out of debt.
Why Should I Get a Personal Loan?
Paying Off Debt: Debt consolidation is one of the biggest reasons self-employed individuals get personal loans. It allows them to pay high-interest debts with a lower interest rate.
Better Than a Payday Loan: Personal Loans have a longer payment option than payday loans. And in some cases, personal loans have lower interest rates.
Emergency Expenses: If you have to pay for hospital bills, renovations, repairs, and other emergencies, getting a personal loan is a great option.
The Bottom Line: Getting a Personal Loan as a Self-Employed Individual Isn't That Difficult
Many people think it'll be challenging to get a personal loan when you're self-employed. Simply put, they're all wrong. Although you'll need to provide more documentation when you're self-employed, if you're able to provide all requirements, you'll be able to get a personal loan with ease.
How Can We Help You?
Mid-Town Finance has been serving Huntsville since 2000. Our team provides straightforward, fair, and honest loans. With that, we give each individual the opportunity to receive the financial assistance they need.
If you're looking to get a personal loan today, reach out to us!