The world economy has taken a new revolutionary direction. Long gone are the days when someone couldn’t make a living without being employed by someone else. In this age of unmatched economic reforms and a free market, you can actually employ yourself. Such a person is termed as self-employed.
However, as much as being self-employed is a good thing, it’s also important to take other factors into consideration – for example, what would you do if you’re self-employed and you happened to be in need of a loan? You realize that banks and other lenders mostly prefer people with pay slips for loan allocations, but that doesn’t mean that a self-employed person can’t “hack” it too. Here are some tips to help you maximize your chances of getting a loan while you’re self-employed:
1. Have Collateral Security
First off, you agree with the fact that the easiest way to score a loan deal is to have something to back it up, and what’s better for that purpose than some collateral security in form of tangible property? This may be land, appliances, or even livestock.
Having something to put up as collateral security for the loan makes the lender trust you more since the risk of them loosing their money is significantly reduced. In fact, you could end up paying less in interest charged on the loan.
2. Have a Loan Repayment Plan
You see, bad things happen when people take up loans without a proper repayment plan. It would be a sad moment for you if you took a $1 million loan just to donate it all to charity without a thought of how exactly you’re going to repay it.
To avoid this kind of negative eventuality, you need to plan on how the $5000 no credit check loan is to be repaid and from what sources you’re going to get the money. First off, most self-employed people would only take loans to expand their business, and that’s what you would do too. A bigger business means more sales volumes and more cash inflow to pay off the loan.
3. Find the Appropriate Lender
The worst thing you can do is get yourself in a bad deal. There are lots of unscrupulous lenders out there who will trick you into taking loans and then slap you with all sorts of hidden charges and fines. You don’t want that.
To avoid this, you can check the lender’s credibility by going through customer reviews and public records of their business dealings. Also, make sure you choose the lender with the best terms of contract – low rates and flexible policies.
4. Make Sure Your Business is Registered
It’s one thing to trying sourcing for a loan, and it’s another thing to try sourcing for a loan to prop up a business that’s not registered. Having your business registered entrenches its credibility and even makes you more trustworthy. Most lenders will want some kind of documentation to prove that you own the business, and that puts you in a better position to get the loan.
5. Consider a Partnership
If you’re self-employed and in business, you may opt to find a partner to co-own the business. If this partner can co-sign your loan application, you stand a good chance of getting it. The more entities involved in a loan application, the more the security, and lenders love that.
6. Have a Good Income Record
First of all, no lender wants to give out a loan to someone with no proven means of repayment. Those employed will be asked for copies of pay slips, but if you’re self-employed, the lender may need some form of assurance that you’re in a position to pay up. In that case, you need to present a credible income record like bank statements showing your cash inflow trends for the last few months or so.
7. You Need an Impressive Credit Score
If you really want to get loans easily, you need to protect your credit score. Some lenders don’t even care if you’re self-employed or have a job in a big company. They’re interested in your history of paying debts. If you keep it clean, that’s a plus for you.
8. Brush up Your Negotiation Skills
The first thing about any business deal is that the best negotiator always has the upper hand, and that applies to loans too. You may be self-employed, but that doesn’t mean you can’t negotiate a good deal with a lender. In fact, lenders love people with smart plans. You might just end up with a loan offer with very flexible payment terms and an attractive interest rate.
9. Find a Guarantor
Since you can’t really present any pay slips to the lender because you’re self-employed, you can bridge that gap very easily even if you don’t have any collateral security to put up. You just need to find a guarantor for your loan. A guarantor is someone to back you up to guarantee the lender that the money will be paid back and that they’re willing to help pay back in the event that you fail to do so on your own. With that, the lender has more reasons to trust you with their money.
10. Join a Credit Union
This is an organization formed by people with a common goal of pooling money and lending loans to members. Credit Unions are known for their low interest rates since they’re basically non-profit organizations. To get a loan from a credit union, you have to join in and save some money in it and own some shares in it. Going by the rules put in place by members, a credit union offers loan amounts with respect to how much you’ve saved. Some will extend loans of three times your savings.
If you can take the above simple tips seriously, you can qualify for loans from almost any lender out there. You just have to be smart and make the best moves towards positioning yourself for the best loan opportunity.