Personal Loan For Self Employed - A Complete Guide

During a financial emergency, such as an unexpected cash crunch, one may have to look for different sources of funding to help themselves get out of their financial difficulties. Additionally, sometimes there may be some expected large expenses that one wishes to carry out, but they do not want those expenses to eat out of their savings.In both these situations, a personal loan can be a good option since it can help you get your hands on some instant funds, and that may help meet your financial needs.So, if you're self-employed and are in need of quick funds, you definitely can look towards a personal loan to meet your urgent requirements.Let us understand a few more details about a personal loan for self-employed individuals.

You may be in a situation where you're in urgent need of cash. Whether it is for paying a medical bill, your child's education fees or any other expense, you may need immediate funding in a quick time. There are many different avenues where you can look for funding, like a loan against property or a gold loan , but if you're looking for an unsecured loan because you do not have a valuable asset to provide as collateral, then a personal loan is your best bet. A personal loan is quickly disbursed and does not require collateral, making it a good option for quick funding.

A personal loan does not have any end-user limitations, which means you can use it for anything you please, as long as it is legal. Commonly, personal loans are used for the following expenses:

• To pay medical bills
• To pay for children's education fees
• To pay for wedding expenses (your own or your children's)
• To carry out home renovation or repairs
• To plan a dream overseas vacation
• To pay off existing debt
• To make a high-value purchase, like a gadget

Nowadays, applying for personal loans for self-employed individuals is very easy and can be done from the comfort of your home. Simply visit the lender's website and fill out the personal loan form. Alternatively, you can also visit the lender's branch physically and apply for a personal loan. But before you make your application, make sure you go through the following steps:

Step 1: Calculate how much you need

You must know exactly how much money you need for your personal loan. So, first, determine why you need to take a personal loan and calculate the amount required. This may depend on the expense itself, like if you're getting a personal loan to fund a vacation, then you may need Rs. 5 lakhs, but on the other hand, if the loan is to fund your wedding, then the expense may go higher to about Rs. 10 lakhs.

Step 2: Check Your Loan Eligibility

If you know how much personal loan you need, you can check whether you're eligible for this amount. Loan eligibility can be checked online using a loan eligibility calculator on the lender's website. You can also do the same by visiting the lender's branch and providing relevant documents to check eligibility. Your loan eligibility will depend on your required loan amount, your income, credit score etc.

Step 3: Calculate EMI

Once you know you're eligible for your loan, the next step would be to zero in on a suitable EMI option. Your EMI will be the amount that you repay every month for your loan. IT is important to set an EMI that is not a burden on your income and also one that isn't too less so as to warrant a longer tenure and increase interest.

Step 4: Gather Documents and Apply

Once you're ready with the above steps, gather your documents and set them up neatly in a file. Then approach the lender and make your application.

The eligibility for a personal loan for self-employed can depend on many factors like:

• Yearly profit from business
• Financial position as reflected in bank statements
• Credit Score
• Location
• Age
• Existing liabilities like loans, credit card bills etc

Lenders may also require that you be in the same business for a certain number of years. In the end, lenders need financial stability from your end, and if they see a rock-solid base of business and income, they tend to sanction the loan quicker.

If you're self-employed and apply for a personal loan, you'll be required to submit additional documents apart from the usual KYC documents. Given below is a general list of documents that may be asked of you:

• KYC documents like ID proof and address proof
• Last three years bank statements
• Last three years Income Tax Returns
• Proof of business documents

The policies of every lender are different, and some may ask for additional documentation if the need arises.

It only takes a few days for a personal loan to be disbursed. If you have an existing relationship with the lender and your documents are rock solid, then you may get the loan sooner. Pre-approved loans can be sanctioned in your bank account within seconds.

Personal loans are usually unsecured loans, which means that they're sanctioned without any security or collateral.To conclude, self-employed individuals can also apply for a personal loan as easily as salaried persons. If you're looking for a personal loan for self-employed people, then make sure you read this comprehensive guide carefully before applying for a loan

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.