If you work for yourself, it can sometimes be hard to find a good loan deal. Lenders are less likely to give you a good deal if you can't show that you have a steady income and aren't a risk. This is changing, though, as more and more people become self-employed, and there are some great deals out there. If you work for yourself and need help finding the right loan, here are some tips that can help.
Who works on their own?
People who are self-employed can have many different kinds of jobs and pay levels. Self-employed people run their own businesses as sole proprietors, as partners in a partnership, or as independent contractors. If you also work as a consultant or other type of freelance agent, you are also considered self-employed.
How to ask for money
Applying for a loan as a self-employed person is similar to applying for any other loan. All you need is a good credit history and proof that you make enough money. How well you can prove your income will depend on what you do for a living and how long you've been self-employed. It will be easier to get a loan if you can show proof of your income. This is why it is important to keep good business records.
How much does it cost?
Self-employed people are finding it easier to get loans, but the rates are still higher than for regular personal loans. This is because lenders think that self-employed people are a bigger risk, even if they are doing well at the moment. But if you can show that you've had the same clients for more than a few years, you'll be able to get a pretty good loan rate. To find the best deal, it's smart to shop around. Many of the best deals can be found online.
Not worth paying for loan insurance
Don't let yourself be tricked into getting loan insurance if you work for yourself. You might be covered if you have an accident or get hurt, but you probably won't be covered if you lose your job unless you have completely stopped trading. Instead, get the right business insurance for people who work for themselves. This will save you money on your loan and cover you for a lot more things.
Self-certification
One of the biggest problems for people who work for themselves is that they often lie about how much money they make for tax purposes. This makes it harder to get a loan. Lenders look at how much money you are making, which you will likely understate in order to pay less in taxes. But you can fix this by self-certifying how much money you make. This means that you tell the lender how much money you make, but you don't have to show proof. This will make it easier for you to get a loan, but you will have to pay more in interest. If you work for yourself, the easiest way to get a loan is to put up property as collateral. Even though you are risking the collateral, if you know you can pay back the money, you will get a better rate and it will be easier to get approved.
