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  • Personal Loan BYTES FROM OUR KITCHEN

    Personal Loan for Self Employed

    Personal loan is a type of loan wherein there are no restrictions as to what the loan amount can be used for by the borrower. The loan amount received using a personal loan can be used for any personal expenditures including wedding, home renovation, cost of a vacation, medical treatments, cosmetic procedures, and other such expenses. This loan works like any other loan but it offers more flexibility and is pretty much available to everyone. There are two types of personal loans - unsecured and secured. There is no need for collateral or security in the case of unsecured personal loans whereas secured personal loans require the borrower to provide the same.

    Personal loan for self-employed

    Self-employed individuals are those who own an unincorporated business all by themselves. They are the sole proprietor of the business. Even though it might seem like it might be hard for self-employed individuals to avail personal loans due to the fact that they are not salaried, that is not the case. They can easily avail these loans without any hassles. Usually, personal loans are granted to salaried, non-salaried, and self-employed individuals. The documentation and interest rate offered for personal loans might be different for a self-employed individual.

    Personal loan from banks and NBFCs for self-employed borrowers

    Banks and non-banking financing companies (NBFCs) provide personal loans to self-employed individuals without any hassle. The difference between the personal loans offered by banks and NBFCs is that banks have stringent rules and some of the banks provide these loans only to individuals with a good credit score, while NBFCs are more lenient with the requirements when providing this type of a loan. NBFCs charge a higher interest rate compared to banks when it comes to personal loans.

    Personal loan for a self-employed individual with bad credit profile

    Having a bad credit history is never a good thing when one has to apply for loans. It can ruin or reduce the chances of getting your loan application approved. However, it is still possible to avail loans with a low credit score. Self-employed individuals with a bad credit profile can avail loans through no-credit-check loans or secured personal loans. In such cases, lenders offer a loan to the applicant based on the collateral provided by him or her. Therefore, it is a win-win for both the lender and the borrower.

    Features of personal loan for self-employed persons

    Listed below are the features of personal loan for self employed borrowers.

    • Competitive interest rates
    • Quick processing of the loan
    • The loan amount can be used for any personal expenditures
    • Flexible tenure periods
    • No collateral
    • Loan amount depends on the repayment capacity of the individual
    • Some banks charge no processing fee for the credit offered

    Interest rate: The rate of interest offered for personal loans depends on the loan amount and the repayment capacity of the borrower. Different banks offer different interest rates so it's best to shop around before you make a decision.

    Benefits of personal loan for self-employed borrowers

    Listed below are the benefits of personal loan for self employed individuals.

    • No restrictions on how the loan can be used
    • Quick approval
    • Option of using collateral
    • Simple documentation
    • Transparency
    • Some banks offer additional benefits like personal accident insurance with the loan
    • Competitive rates

    Disadvantages of personal loan for self-employed applicants

    Listed below are the disadvantages of personal loan for self employed persons.

    • Higher interest rate compared to other loans
    • No part payments
    • A good credit history is important to avail a personal loan
    • Mandatory bank account
    • Late payment charges apply

    Personal loans for self-employed individuals in India

    A self-employed individual can avail a personal loan in India without any hassles. The loan amount granted to a self-employed person depends on his or her repayment capacity. Different banks have various terms and conditions to provide these loans to their self-employed customers.

    Top 5 personal loans for self-employed customers in India

    Listed below are the top 5 lenders that offer personal loans for self-employed offered in India.

    1. ICICI Bank Personal Loan

    ICICI Bank Personal Loan is a multipurpose loan that comes with a fixed interest rate. The loan can be repaid in easy installments and there is no need for collateral or security. It comes with easy documentation and quick processing.

    Loan features
    • Quantum of loan for self-employed customer: Up to Rs.20 lakh
    • Loan tenure: 12 to 60 months
    • Interest rates: 10.99% to 17.99% p.a. (as on June 2018)
    Eligibility

    Listed below is the eligibility criteria for ICICI Bank Personal Loan:

    • Minimum age: 28 years (25 for doctors)
    • Maximum age: 65 years
    • Minimum turnover: Rs.40 lakh (non-professionals) and Rs.15 lakh (professionals)
    • Stability: In the business for at least 5 years (3 years for doctors)
    • Minimum profit post tax deduction: Rs.2 lakh (proprietorship firm or self-employed borrowers) and Rs.1 lakh (non-professionals)
    • Relationship with the bank: Minimum 1 year of liability relationship or asset relationship
    Documentation required

    Listed below are the documents required for ICICI Bank Personal Loan:

    • Proof of identity
    • Address proof
    • Audited financials of the recent two years as a proof of income
    • Last 6 months’ bank statement
    • Office address proof
    • Proof of workplace ownership
    • Proof for continuity of business
    • 2 passport-size photographs

    2. Bank of Baroda Personal Loan

    Bank of Baroda (BoB) offers personal loans to self-employed professionals and business persons to help them handle financial requirements such as marriage expenses of self or family member, child’s education, business expansion costs, vacation expenses, home renovation expenses, etc.

    Loan features
    • Minimum loan amount: Rs.1 lakh (metro and urban areas) and Rs.50,000 (semi-urban and rural areas)
    • Maximum loan amount: Rs.10 lakh (metro and urban areas) and Rs.5 lakh (semi-urban and rural areas)
    • Loan tenure: Up to 48 months
    • Interest rates (as on June 2018):
      • 1-year Marginal Cost of fund-based Lending Rate (MCLR) + Strategic Premium + 3.00% to 1-year Marginal Cost of fund-based Lending Rate (MCLR) + Strategic Premium + 6.00% p.a. (existing BoB customers with account relationship of at least 6 months)
      • 1-year Marginal Cost of fund-based Lending Rate (MCLR) + Strategic Premium + 5.00% to 1-year Marginal Cost of fund-based Lending Rate (MCLR) + Strategic Premium + 8.00% p.a. (other bank customers with account relationship of at least 6 months)
    Eligibility criteria
    • Minimum age: 21 years
    • Maximum age: 65 years
    • Minimum business experience: 1 year of stable business
    • Minimum gross monthly income (GMI): 6 times of GMI (GMI less than Rs.75,000) and 8 times of GMI (GMI more than Rs.75,000)
    • Account relationship:
      • Satisfactory standing relationship with any bank for at least 6 months (loan up to Rs.2 lakh)
      • Satisfactory standing relationship with BoB for at least 6 months (loan above Rs.2 lakh)
    Documents required
    • Passport-size photograph
    • Proof of identity
    • Proof of address
    • ITR of last 2 years
    • Proof of business continuity
    • Bank statement of last 6 months

    3. Citibank Personal Loan

    Citibank offers personal loan to self-employed borrowers which can be granted within a span of two days. The loan offers full and part repayment options along with additional funds. It offers loans for terms ranging from 12-60 months.

    Loan features
    • Quantum of loan: Rs.1 lakh to Rs.30 lakh
    • Interest rate based on annual gross take-home (as on June 2018):
      • Self-employed non-professionals - 17.99% to 18.99% p.a. (for up to Rs.9.99 lakh) and 15.99% to 17.99% (for more than Rs.10 lakh) p.a.
      • Self-employed professionals - 15.99% to 16.99% p.a. (for up to Rs.9.99 lakh) and 14.99% to 15.99% (for more than Rs.10 lakh) p.a.
    • Partial prepayment option available
    Eligibility criteria

    Listed below is the eligibility criteria for Citibank Personal Loan:

    • Any self-employed individual
    • No income proof required
    • Existing citibank customers
    Documents required

    Listed below are the documents required for Citibank Personal Loan:

    • Photograph
    • ID proof
    • Proof of residence
    • Proof of age
    • Proof of continuity of business
    • Proof of occupation

    4. HSBC Personal Loan

    HSBC Personal Loan for self-employed individuals comes with flexible repayment terms and attractive interest rates. The personal loan can be used for any short-term financial crisis.

    Loan features
    • Quantum of loan: Up to Rs.30 lakh (based on the credit policy of the bank)
    • Interest rates: 11.29% to 17.50% p.a. (as on June 2018)
    • Loan tenure: 6 to 60 months
    Eligibility criteria

    Listed below is the eligibility criteria for HSBC Personal Loan:

    • Applicant must have an account with HSBC
    • Should be a resident Indian
    • Minimum age: 21 years
    • Maximum age: 65 years
    • Minimum net annual income: Rs.40,000 p.a. Rs.4 lakh
    Documents required

    Listed below are the documents required for HSBC Personal Loan:

    • One passport-size photograph
    • Valid ID proof
    • Valid proof of residence
    • Proof of age
    • Certified financials
    • IT returns of last 2 years
    • Latest 6 months’ bank statements

    5. IDBI Personal Loan

    IDBI Personal Loan helps meet unexpected financial emergencies. Be it a wedding expense or a luxury trip, you can avail this scheme to receive the required funds during a financial crisis.

    Loan features
    • Quantum of loan: Rs.50,000 to Rs.5 lakh
    • Interest rate: 12.49% to 13.49% p.a.
    • Loan tenure: 12 to 60 months
    Eligibility criteria

    Listed below is the eligibility criteria for IDBI Personal Loan:

    • Minimum age: 22 years
    • Maximum age: 60 years
    • Minimum annual average balance: Rs.25,000
    • Minimum annual business income: Rs.2,40,000 (for previous 2 financial years)
    • Applicant should have liability relationship with the bank for at least 1 year or asset relationship after full disbursement with at least 6 timely EMI payments
    Documents required

    Listed below are the documents required for IDBI Personal Loan:

    • ID proof
    • Address proof
    • Age proof
    • Proof of business
    • Proof of continuity of business
    • Latest 6 months’ bank statements
        

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