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Can I get a loan if I'm self-employed?
10th July 2020
When applying for a loan, something every lender will check is your income, because of its impact on your ability to make your repayments. This could make it difficult if you’re self-employed, as your income can vary from month to month and some lenders may prefer for it to be consistent.
It’s not impossible to get a loan if you’re self-employed, there are still several types of loan you could be eligible for. Our blog will help you understand these loans and what you should consider before applying for one.
What types of loans can I get if I’m self-employed?
If you’re self-employed you may be eligible for the following types of loan:
Personal loans
A personal loan has a huge level of flexibility, lots of different lenders offer them and each have their own lending criteria. This means the loan rates can fluctuate between lenders and so can your chances of being accepted; some lenders may have a stricter lending criteria than others.
Personal loans aren’t usually secured against anything, so it shouldn’t matter if you don’t own your own home or vehicle. As an application for a personal loan is supported by your credit history and financial situation, some high street lenders may not approve your application if you’ve got a poor credit history.
If you’re thinking of getting a personal loan to help with costs for your business, some lenders may not let you. So, before you apply for a personal loan make sure you read the lender’s requirements.
Business loans
If you need a loan to help support your business, you can apply for a business loan. A lender will ask to see your business accounts which will help them decide if you can afford the repayments on your chosen loan.
If you are a new business with a business plan, some lenders may offer you a start-up loan instead.
Guarantor loans
A guarantor loan could be an option if you aren’t able to get a personal loan. A guarantor signs for the loan alongside you and is responsible for making any repayments on your loan if you aren’t able to.
Usually a guarantor will be a close friend or family member, they also will have to pass any checks that a lender might complete.
Secured loans
Applying for a secured loan could be another option. With a secured loan, the money that you borrow is ‘secured’ against something you own, like your home or vehicle. They often have lower interest rates, however if you aren’t keeping up with your repayments, as a last resort the lender can pursue you for the asset you secured the loan against. So, you need to factor this into your decision.
What can I use the money for?
- Personal use: You could use the money to help pay for unexpected bills or larger projects that you are planning.
- Business use: You could use a business loan to help buy a new work vehicle, buy new tools or upgrade the IT equipment that you use.
Will a loan cost me more because I'm self-employed?
If you’re self-unemployed and pass all the lender’s checks, there’s no reason for you to be offered different rates. This will depend on the individual lender though.
You might not be able to use a high street lender if you have a less than perfect credit history, which could mean the loan rates are higher; this would also be the same for someone who isn’t self-employed.
About Dot Dot Loans
Dot Dot Loans is an online lender of short-term and long-term loans. You could borrow between £200 and £4000, with fixed repayment terms of 3 to 48 months, depending on your loan amount. To see if you’re eligible for a cash loan from Dot Dot Loans, visit our FAQ’s.
