The popularity of personal loans has amplified over the years as this financial product has emerged as the potent solution for all monetary requirements. Whether you are planning a wedding or an urgent requirement for funds has emerged, this loan option can solve all of them.
However, there needs to be more clarity among borrowers, which often hinders their decision-making. Is there any difference between a personal loan for self employed and salaried employees? Can I get either of them?
Let’s find out the answers.
Personal Loan For Salaried And Self-Employed, What’s The Difference?
Yes, there are a few differences between a personal loan for salaried and self-employed individuals. The idea of the loan and its benefits, however, remains the same, but a few eligibility parameters are where you will notice the differences.
Here is an example for you to better understand it –
· Eligibility Parameters For Salaried Employees
Age: 21 to 58 years
Credit score: At least 700
Work experience: At least 6 months (for the same organization)
Minimum income: Rs.15,000 per month
· Eligibility Parameters For Self-Employed Individuals
Age: 21 to 60 years
Credit score: Minimum 700
Business vintage: At least 2 years
Minimum income Rs.15,000 per month
This example clearly shows that the primary difference between personal loans for salaried and self-employed borrowers lies in age, work experience, or business vintage. Additionally, some lenders may have different monthly income requirements. Documentation requirements also differ, with salaried employees submitting salary slips and Form 16, while self-employed individuals provide their ITR and business profit and loss statements. The bank account statement required also differs, with salaried individuals needing to provide 3 months of statements and self-employed individuals requiring 6 months. As these parameters are set by individual lenders, it is essential to verify them before applying to avoid any issues.
However, there are no significant differences in loan offers between these two categories. Repayment terms, punishment for non payment of personal loan, additional charges, application processes, etc., remain the same.
Can I Apply For Either Of The Personal Loan Offers?
With the highlighting differences out of the way, let’s understand whether you can apply for either of them or not. But, before moving on to the conclusion, it is essential to understand the reason behind this classification.
The idea of segregating the personal loans into two sub-categories is to help the borrowers in their application. Since the ethos of the loan and benefits remains the same, you are not likely to miss out on anything. However, a categorization like this will help financial institutions to sort the application better and approve them easily without any delays.
So, if you, as a self-employed individual, apply for a personal loan designated for a specific category, your application will not get mixed with others. Hence, the financial institutions will quickly look through your application, if you are meeting all the prerequisites and approve it without any delays. Therefore, you don’t need to wait longer and easily meet all your monetary requirements.
Furthermore, this classification has also brought more clarity to the process. As an applicant, you are now aware of exactly the criteria you must meet and the documents you must submit. Depending on that, there will be no space for any ambiguities and mistakes, which can delay this process further.
It is safe to say that, as a personal loan applicant, you can only apply for the category you belong to. If you are a salaried individual, you must apply accordingly. If not, it will result in rejection, which is not ideal for your credit profile as a borrower.
Parting Thoughts
Considering the wide range of benefits, personal loans are easily one of the preferred financing options. It is convenient for almost every financial requirement. To help your cause, lending institutions have developed a system to streamline the application process. This is where this classification of self-employed and salaried individuals comes in handy.
Read also: The Best Way to Get an Instant Personal Loan
