A stable income is important for getting any kind of loan, including personal loans.Salaried individuals can show their payslips as proof of a stable income. However, it is not so easy for self-employed people. This can be addressed by maintaining proper accounts of your business or shop and filing tax returns on time.
These documents are valid proof of your income and accepted by lenders offering personal loan for self-employed. Here we talk about certain tips that can prove to be useful for self-employed people looking to apply for an instant personal loan online or offline.
#1: Maintain Proper Records of Your Business or Shop
Proper records showing the income and expense details of your business or shop or consultancy will not help you to get a clear idea about your financial position but also act as a proof of income for the lenders. You will be required to submit a copy of your financials to the lending agency not only as proof of your income but also to assure them of your repayment capability. You can even use an accounting app to record all your financial transactions and keep a tab of your finances.
#2: File Tax Returns and Pay Applicable Taxes
Income tax returns are a must as per law besides being an important document for showing the proof of your income. You can easily submit the copies of your last two years’ income tax returns with your personal loan application.
#3: Pay Your Dues on Time
Do ensure that you pay all your dues whether to vendors or suppliers or credit card bills or utility bills on time. This provides an assurance to the lenders that you are a creditworthy person and have a good record of meeting all your liabilities. This also leads to a good credit score, a major consideration amongst lenders for processing loan applications.
#4: Borrow Only if Necessary
Frequent use or overuse of personal loans is not a good option. It may help you in the short run but lead you into a debt trap over a longer run where you are taking one loan to repay an earlier one. The option of taking personal loans should be used to fund emergency expenses and not randomly for expenses that are avoidable or not urgent. So, file an instant personal loan application only if you have no other means of funding and there is no way you can avoid the expense.
#5: Get a Pre-approval
A good option for self-employed people is to get a loan pre-approved when they have the time rather than wait for the time when they need funds. A pre-approval not only saves time and effort but also ensures that you get the necessary funds easily. You can even use a personal loan eligibility calculator to check how much loan you are eligible for and at what terms. This will help you plan out your future finances for ensuring timely repayment of the borrowed amount.
Follow these tips to ensure that you can get a personal loan when you need it.