Loans For The Self Employed

Loans For the​ Self-employed
If you​ work for yourself,​ then finding a​ good loan deal can sometimes be difficult .​
With less means to​ prove that you​ have a​ stable income and so are not a​ risk,​ lenders are less inclined to​ offer you​ a​ good deal .​
However,​ with more and more people becoming self-employed this is​ changing,​ and there are some great deals around .​
If you​ are self-employed and need some help to​ find the​ right loan,​ then here are some useful tips to​ help you​ out.
Who is​ self-employed?
People classified as​ self-employed can be in​ a​ wide variety of​ jobs and pay categories .​
Anyone how operates a​ business as​ a​ sole proprietor,​ is​ a​ partner in​ a​ partnership,​ or​ an​ independent contractor,​ is​ classed as​ self-employed .​
If you​ also work in​ any role as​ a​ freelance agent,​ such as​ a​ consultant,​ then you​ are classed as​ self-employed also.
How to​ apply for a​ loan
Applying for a​ self-employed loan is​ much like applying for any other type of​ loan .​
All you​ need to​ do is​ have a​ decent credit history and be able to​ prove your income .​
How well you​ can prove your income will depend what business you​ are in​ and how long you​ have been self-employed .​
The better you​ can prove your income then the​ easier it​ will be to​ get a​ loan,​ which is​ why it​ is​ crucial to​ keep good business records.
What are the​ costs?
Although getting a​ loan if​ you​ are self-employed is​ becoming easier,​ the​ rates are still higher than for regular personal loans .​
This is​ because lenders see self-employed people as​ a​ greater risk,​ no matter how well they are currently doing .​
However,​ if​ you​ can show repeat contracts with clients over a​ few years,​ then you​ will be able to​ get a​ pretty decent loan rate .​
It is​ wise to​ shop around to​ look for the​ best deal,​ with a​ lot of​ the​ best deals being found online.
Loan insurance not worth it
If you​ are self-employed,​ don't be fooled into taking out the​ loan insurance .​
Although you​ might be covered for accident or​ injury,​ you​ are unlikely to​ be covered for unemployment unless you​ have completely ceased trading .​
Instead,​ take out adequate business insurance specifically for self-employed people .​
This will cover you​ for a​ lot more things and will save you​ money on​ your loan.
One of​ the​ biggest problems facing self-employed people is​ that you​ are often legally understating your earnings for the​ purposes of​ tax,​ which will hurt you​ when trying to​ get a​ loan .​
Lenders look at​ how much profit you​ are making,​ which of​ course is​ going to​ be understated to​ reduce your tax burden .​
However,​ a​ solution to​ this is​ to​ self-certify the​ amount that you​ earn .​
This means you​ inform the​ lender how much you​ earn,​ but you​ don't have to​ prove this with documentation .​
This will make it​ easier to​ be accepted for a​ loan,​ but will involve you​ having to​ pay higher interest rates .​
If you​ are self-employed,​ the​ easiest way to​ get a​ loan is​ to​ secure it​ against collateral such as​ property .​
Although you​ are putting the​ collateral at​ risk,​ if​ you​ know that you​ can pay the​ money back then it​ will get you​ a​ better rate and make the​ approval process easier.

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