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By Amanda Thompson
Self employed loans are the loans, which are meant for self employed people. Before, discussing about these loans, it is necessary to mention, who are considered as self employed. Normally, self employed people run their own enterprises. They could be a proprietor, contractor or consultant.
For assisting self employed persons financially, self employed loans are tailored. A borrower can apply for self employed loans for various reasons. Some of them are like
For business expansion
For consolidating debts
For improving homes
For personal purposes.
Self employed loans are available both in secured as well as in unsecured forms. In case of secured option, pledging something against the lending amount is necessary. Any sort of valuable objects can play the role of security including home, automobile etc. Oppositely, unsecured option does not claim any security. A borrower can avail this option without using anything as a security.
As self employed loans, borrowers can avail the amount, ranging from 3,000- 250,000. The repayment period of these loans varies within 5-25years. Usually, on the basis of borrowed amount and borrowers credit score, the interest rate is decided. Due to the increasing competition among the lenders, availability of these loans at a better interest rate is possible now. Generally, it is seen that most of time, self employed persons do not have any stable income. Because of this reason, self employed loans are available at a higher interest rate.
However, before offering self employed loans to borrowers, lenders normally evaluate the income of borrowers, since it is most of the important part of these loans. In case of assessing borrowers income, lenders may follow one of these two methods.
Self certification: In this method, borrowers can declare their income without showing any valid income proof.
Audited accounts: By following this method, lenders get the details of borrowers income on yearly basis.
Based on the accessibility of income proof certificate, these loans can be divided as a low doc loan or no doc loan. In case of a low doc loan, borrowers need to submit a few documents. Oppositely no document is required for the latter one.
A borrower can avail self employed loans, despite having bad credit score. All types of bad credit scorers, such as, CCJs, IVAs, bankruptcy, defaults, arrears can get the advantage of these loans. But due to their bad credit score, they may have to pay a higher interest rate on these loans.
In past, while availing any loan, a self employed person used to face a lot of hindrances. Now, self employed loans offer them a chance to avail loans for various purposes.
About the Author: Amanda Thompson holds a Bachelors degree in Commerce from CPIT and has completed her masters in Business Administration from IGNOU.To find a Self employed loans, debtconsolidation loan, cheap rates, unsecured loan that best suits your needs visit