Being a business owner or self-employed individual doesn’t mean that you can never fall short of funds. You can’t be financially stable all the times so; banks are there to help you in such situations. People take the assistance of personal loan when it comes to borrowing money for some personal work or emergency.
The banks provide personal loans to various people be it salaried or non-salaried individuals. But, there are some norms which you should fulfil for availing the personal loan. The rules are different for self-employed and salaried people as banks have to check their credibility of paying off the loan in different ways.
So, today we are going to talk about non-salaried individuals who want to apply for the personal loan. They must know a few necessary things before applying for the personal loan. Mostly, all the banks set similar terms for people of a category. Knowing it all would be beneficial in getting the personal loan smoothly.
There is a myth that it is difficult to avail personal loan for non-salaried people as compared to the salaried ones. Of course, it is quite easy to show proof of your income when you work in a company. But, it doesn’t mean that self-employed people can’t borrow money via personal loans.
- Self-employed Individuals with Income Proof:
Just like others, self-employed people also have to show proof of their income to get the loan. It is necessary to demonstrate your financial potential to pay off the loan amount on time. So, you should present a copy of your company and personal tax returns to show the turnover and profit of your business. For non-salaried people with income proof, availing personal loan is a very smooth process.
- Self-employed Individuals without Income Proof:
Now, there are some people who run a small work of their own and don’t have any authentic income proof to show their credibility to the lenders. Can these people also avail a personal loan? Yes, the chances are low but, it is possible. The banks only need to confirm that you can pay the regular EMIs of your loan amount. If you don’t have an income proof then, you can present some strong asset as collateral security. Getting a secure personal loan by giving your property papers as a security asset is possible in this case. Additionally, you can show your business stability by presenting proof of the duration of your business.
You should get proper knowledge of the eligibility terms before applying for the personal loan. People who don’t pay attention to these things in haste often have to faceloan rejection. So, be smart enough to search the bank’s website and know these terms.
The common terms for non-salaried individuals are given below:
- The borrower should be a resident of India.
- People between the age group of 24-65 can only apply for a loan under this category.
- The minimum turnover/profit of the borrower should be as per the bank’s requirement.
- The applicant must have minimum 3 years of work experience in the current business.
- The annual turnover should be 1 lakh or more.
Interest rates play a central role in the personal loan. As this amount is going to be added in EMIs so, people try every possible thing to avail lowest interest rates. These rates usually vary from bank to bank and profile to profile as well. For non-salaried individuals, it varies from 10.99%-25% as per the profile, the banks and the policy you are opting.
If you are a suitable candidate that fulfils all the criteria above the expectations of the bank then, you could get low-interest rates. Otherwise, people who have a good credit score or healthy relationships with a bank can also get benefit in interest rates.
Factors Affecting Non-Salaried Personal Loan Interest Rates:
- Annual Income Tax Return: People with high income and owning a large business can avail lower interest rates.
- Type of Business: Applicants with trending or good business type are considered suitable for low-interest rates. People dealing with manufacturing and other sound businesses are counted under this category.
- The profession of Self-employed People: Banks are likely to pay low-interest rates to self-employed professionals like doctors, engineers, CA and architects. These people rarely indulge in any default.
These things prove your financial stability. So, the more stable you are, the less will be your interest rates.
Knowledge of necessary documents required for the personal loan will help you in collecting all of them beforehand. Non-salaried people require the following documents:
- Duly signed loan application form
- Passport size photo
- Identity proof – Passport/Voter ID/Pan Card
- Age proof – Birth Certificate/Passport
- Residence proof – Passport/Utility Bill
- Income proof – latest income tax return, the balance sheet of the last two years certified by a CA
- Signature verification proof – Passport/PAN card
- Bank statement – bank statement of the previous 3 months/ bank passbook of last 6 months
You should submit all the documents at the time of personal loan application submission. People without income proof should look for the banks that are providing loans to them as well. Although there will be limited options, you should look carefully before making the final decision.
Personal Loan for Non-Salaried People with Bad Credit Score:
Thinking about applying for a loan without having a good credit score? Well, don’t be hopeless by reading that credit score is very important in the case of a personal loan. Indeed credit score is significant but, only in the case of non-secured personal loans. In non-secured loans, credit score is the only thing which shows your capability of repayment.
So, if have a bad credit score then, you can go for secured personal loans. In this case, you would be giving something as collateral security on which lender can rely. It will cover up your bad credit score.
Hence, taking a personal loan is not a difficult task for non-salaried people after getting accurate knowledge.