Personal loans for the self-employed: keys you should know

If you want to make a personal decision loan but you are not currently employed, so you don’t need to worry. Most banks offer loans even to the self-employed, as long as they meet other conditions.

For the uninitiated, a personal loan is a unsecured loan provided by banks to borrowers for a variety of personal needs that vary widely from a wedding to a home renovation, and from vacations to an individual emergency.

However, you will need to prove regular income through your tax return or bank statement. There may be times when the bank offers you a pre-approved personal loan based on your bank statement. credit score and general profile.

Let’s understand more about this here. Suppose Ajay Mishra, a 28-year-old freelance data scientist, wins $1.25 lakh (on average) per month. Your monthly income makes you eligible to apply for a personal loan as most lenders consider the monthly income threshold to be $25,000 only.

Additionally, you will be eligible to apply for a personal loan if your credit score is strong, say, 750 or higher. You are expected to carry identity documents like aadhaar, voter ID and income tax returns (RTI).

If you can provide these documents, you will be considered eligible for a personal loan.

Conditions to be met

Additionally, some banks offer pre-approved personal loans to their customers, in which case they are not required to submit any documents.

These are some of the preconditions that must be met to be eligible for a personal loan:

1. Income Tax Return or 26AS for the last 2 years.

2. Submission of necessary documents like Aadhaar and PAN.

4. High credit score, for example, 720 or higher.

5. The age group must be between 21 and 65 years.

It is worth mentioning that a self-employed worker does not need to submit payrolls for obvious reasons. Meanwhile, other conditions remain the same, that is, a high credit score (above 720) and a loan repayment schedule spread between 12 and 60 months.

Existing loan

Additionally, if you already have an outstanding loan, the bank takes into account your repayment responsibility before deciding your ability to repay the new loan.

For example, if your monthly income is $1.25 lakh and you already have a car loan EMI of $15,000 is then considered the net income $1.05 lakh (after deducting current loan EMI).

EMI calculator

Meanwhile, borrowers are advised to check the expected EMI amount using a personal loan EMI calculator. here. With the help of this EMI calculator, you can determine the monthly installment amount you will have to pay by entering three inputs i.e. interest rate, total loan amount and loan duration.

For example, if you borrow $5 lakh for 3 years at 10.5 percent interest, your monthly EMI, as shown by the EMI calculator, would turn out to be $16,251.