- Past history: Banks will provide personal loans to self-employed only if they have a good past credit score (based on the credit history). It’s quite unfortunate, but the self-employed do not get a chance to build a credit history which is when personal loans get difficult. A uniform source of money adds to your credibility. This is also indicative of their credit repayment pattern. In this way, private lending institutions are much more reliable as they lend to individuals with low credit scores as well.
- Income source:To be able to apply for a personal loan, its critical to have a minimum monthly income. A regular income source is important for apply for a personal loan. All banks and NBFCs have a minimum income criteria and expect the applicant to earn regularly atleast. The minimum income expectations of the financial institutions start from a meagre Rs. 25,000.
- Age bracket: The age of the applying individual should be 21 years or more. The age bracket depends on the bank /financial institution. Let’s say that a leading NBFC defines that a self-employed should be 28 years or older when applying for a personal loan.
- Business survival: This is another super critical criterion that individuals must meet when they apply to any financial institution. A self-employed person generally is judged well by the money he/she makes. The business you run must have already survived for 2 years or over, and still doing well. This is quite an essential for banks, however this changes with different banks/ financial institutions.
- Strength of relationship with the institution: If you’re a self-employed and want to apply for a personal loan, then its best if you apply to a bank with an existing account. Your relationship with the bank should have stayed for a year or more.
Personal loans pose to be a striking option for individuals in need for fast liquidity of assets. A personal loan is the most lucrative deal when in an urgent need for emergency finances. Personal loans are extremely fluid as they can be used for any purpose i.e., banks generally do not provide self-employed loans for a specific purpose. They can be used in the way it deems fit. However, these personal loans can be used by salaried and self-employed people. These loans are made to salaried employees as well as self-employed people. Let’s focus a bit on categorizing who self-employed individuals are? Self-employed individuals are the owners of their ventured business. Typically, self-employed do not have a fixed income, but they are the owners of their business. The problem area is that since businessmen do not have a fixed income, it gets difficult to track their credit score and history. That’s exactly why it’s difficult to have personal loans by self-employed. What is the eligibility criteria for personal loans to be taken by self-employed individuals?