Did you know nearly 50% of India’s population is self-employed? If you are one of them and wondering whether you can secure a personal loan, the answer is yes!
Many lenders in India also offer personal finance options for self-employed individuals. However, many factors decide the approval of a personal loan for self-employed. They are:
Lenders need to know that you can repay the loan timely. Since personal finance is primarily unsecured, lenders don’t have the collateral security. So, one factor which plays a significant role in determining eligibility is your credit score. Other than eligibility, your credit score will also help lenders determine the loan amount, personal loan interest rate, and tenure you qualify for.
As a rule of thumb, maintaining a credit score of 750 or higher will lead to hassle-free approvals, and in some cases, even lower interest rates.
Another essential factor that determines your personal loan eligibility and approval is your income. Lenders will only approve a loan if they are sure about your capacity to repay the loan on time. Poor profits and variable revenue indicate a higher chance of delayed or defaulted repayments. That’s why lenders will review your profits and losses, balance sheets, and other income-related documents before approving your loan application.
Additional Read: How to Choose the Best Personal Loan for Needs?
Income tax returns
Lenders are very strict regarding your income tax returns (ITR) since they provide an overview of your financial health. Many lenders typically require ITRs of the last three years when you apply for personal loan. As such, not filing your ITR on time can spell trouble since a personal loan for self-employed without ITR is impossible to come by.
Also, even if you own a private limited company or an LLP, lenders will still evaluate the business returns in your name. Therefore, you must file the ITR in your name instead of your company’s name for the income earned from the business.
Additional Read: 5 Ways in Which Personal Loans Can Help You Save Money
Continuity of business
Lenders will check your continuity of business while reviewing your loan application. The specific requirement for the same may differ based on the lender. However, many lenders typically prefer applicants who show business continuity of at least 3 years or more, as the business is more stable so applicants are less likely to default on their loans.
Over to you
Are you a self-employed individual looking for personal finance? If yes, then you are in the right place! Opt for Tata Capital’s instant personal loan for self-employed today, and get flexible tenures, attractive interest rates, and swift loan disbursal!
What’s more, our personal loan EMI calculator can help you accurately estimate your EMI commitments and plan your finances smartly. Get in touch today!