Given the covid pandemic, many individuals previously working in sectors that have now been paralyzed or put on an indefinite halt by the pandemic have to seek employment elsewhere. Some might choose to start their own venture, dabble in freelance and come to be categorized as self-employed.
Traditionally, an application for a personal loan would require the applicant to provide, among other things, a salary slip and proof of employment. However, for individuals who are self-employed, this is bound to be impossible to do as by definition, one who is self-employed works for themselves and is not an employee. Despite this, there are personal loans for self-employed.
Personal loan for self-employed individuals can be split into two categories. Those who have proof of income, and those who do not.
Personal loan with proof of income
If a self-employed individual has an income that they are generating that they can show proof for, the process is likely to be less stringent. While specific amounts for income etc. vary based on the lender, the basic personal loan eligibility criteria is:
- 18 years of age when they apply
- Under the age of 60 when the term of loan ends
- Making an annual revenue of rupees one lakh or over
- An Indian citizen and resident
Personal loan with no proof of income
While it is common practice for lenders to require a salary slip, it is possible to avail of a personal loan for self-employed without one. However, since banks and various lenders are still taking on a risk by giving out this loan, it is done on the basis of collateral: An individual keeps certain assets with the bank that can be seized up on non-payment of loans.
Additionally, the document requirements for most personal loans remain the same: Proof of employment, salary, residence and identity proof along with a couple passport photographs.
Applying for a personal loan for self employed
Despite what most people might believe, or lead you to believe, individuals who are self-employed and /or cannot provide any proof of income and employment can also avail of personal loan facilities. They can use it to meet any unexpected expenses, school fees or a wedding bill.
Applying for a personal loan is simple, and requires you to only fill out a basic form and furnish the required documents. Most financial institutions also provide easy to use personal loan emi calculator that helps you know your emi and interest beforehand to help you plan finances better. Make sure to read all the loan related documents carefully before applying for one.