Self Employed Loans - by Lenders Who Do Not See Self Employment in Poor Light
Written by: Ann Gibson
There are many instances of people who gave up their cosy and
paying job for the want of starting their own operations. Being
self employed gives them the thrill of being able to work on a
project from start to finish. It also helps them in making full
utilisation of their skills. Lenders however do not consider the
self employed worthy enough to qualify for their loans. Regular
loans require a systematic payment from the borrower's side.
Self employed people, with an unsteady incidence of income are
deemed incapable of making regular payments.
The reason behind lenders refusal to self employed people is in
no way motivated by the concern for safety of the amount lent.
Lenders are well aware of the high paying potential that self
employed people can offer. It is for this reason that a large
number of loan providers have come up with special loan deals
for the self employed people. These loans are known as self
employed loans and are built in a form as to incorporate the
features of the self employed people.
Trying to find a way by which self employed borrowers can make
payments towards the self employed loans and also not be tied to
fixed obligations, loan providers hit upon the flexible method
of payment. Under a flexible method of payment, the loan
provider does not tie borrowers to a watertight payment
structure. The borrower has the option to pay as much as he
wants against the loan taken. The months when profits see a
high, payment too can be made of a higher amount. The higher
payment will provide for the times when profit from operations
is not as high. These are the times when underpayment on account
of self employed loan can be made. The payment is left for the
borrower to decide. He can decide the payment according to his
state of financial affairs.
Payment holidays form another important feature of self employed
loans. A payment holiday is when borrowers take complete off
from making payments. This is when borrowers' finances see a bad
turn or when the borrower has other important expenses to make.
Borrower must discuss his financial situation and the reasons
behind the payment holiday with the loan provider before payment
holiday is approved.
Would lenders have accepted to mould the repayment structure in
this manner in a regular loan? No! Most loan providers expressly
prohibit overpayments or underpayments stating that such
moulding of the repayment structure of a regular loan would
increase the number of calculations that they have to make. Thus
the borrowers of regular personal loans have to make fixed
payments whatever be their financial status.
Self employed loans are also beneficial for borrowers who have
experienced bad credit history in the near future. Through self
employed loans, such entrepreneurs can raise the necessary
finance easily. Any regular loan lender would have fussed a lot
on the bad credit history and would have raised the interest
Self employed loans help borrowers make up for an important
discrepancy. The self employed people are not able to prove
their income. In fact, they cover up their income to evade
taxes. Lenders, who need income records to check viability of
borrower for loans, feel unsafe to deal with persons who only
claim to have a certain income. Self employed loans can in such
cases work as a self certified loan where borrowers have to
themselves certify their income.
For the convenience and flexibility that is offered on self
employed loans, the self employed people will have to make an
extra payment in terms of interest. Self employed loans carry a
higher percentage of interest. Still borrowers will not feel the
pinch because interest rates now are at an all time low level.
The typical interest rates or APR start from 7%. At any other
time, borrowers would have to pay expensively for the self
Self employed loans present an important method whereby
borrowers can convert the excess of equity in their home. The
terms on which self employed loans is lent is further going to
improve if the borrower has pledged certain collateral to the
loan provider. The loan proceeds can be conveniently used for
any of the personal as well as business purposes that the
borrower desires. Lenders, in a bid to make the self employed
loans more flexible, wouldn't interrupt in the borrowers'
decision of usage.
About the author:
Loan borrowing is like once in a life time decision and much is
at stake. It is indeed not a good thing that many people are
misguided into taking loans that are not appropriate to their
financial situation. This leads to many allied misgivings. To
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