Personal loans allow people to access extra funds for major expenses or financial emergencies. While banks and other loan providers offer personal loans, the terms and interest rates vary greatly. Doing thorough research is key to getting the best rate and repayment plan to suit your needs and budget, whether you are salaried or self-employed.
Loans for the Self-Employed
Self-employed individuals can qualify for personal loans designed for their situation. These loans recognise the unpredictable income streams of entrepreneurs and small business owners.
Benefits include:
- No collateral required
- Easy online application with minimal paperwork
- Large loan amounts based on eligibility
- Flexible 2 to 6-year repayment periods
- Funds usable for any legal purpose
To qualify, self-employed loan applicants typically need:
- Minimum age between 22 and 60 years
- Professional licenses and tax documents
- Bank statements and income statements
- Good credit score (730+ recommended)
Interest rates may be higher than salaried loans to account for income variability. Top banks may offer rates from 10.5% to 12.5%.
Loans for Salaried Employees
Salaried employees can also access personal loans catered to their profile, often with lower interest rates due to steady paychecks.
Advantages include:
- No collateral
- Quick approval based on eligibility
- Loan amount based on income
- Flexible 2 to 5-year repayment schedules
- Fund usage not restricted
Key eligibility criteria for salaried applicants:
- Age between 21 and 58 years
- Minimum 6 months at current job
- Latest payslips and bank statements
- Proof of previous year’s tax returns
- High credit score (730+ recommended)
Interest rates for salaried employees range from 10.5% to 14.5% at leading banks.
Tips for Securing the Best Rate
Whether self-employed or salaried, follow these tips to help secure the lowest interest rate from lenders:
Boost Your Credit Score
Aim for a score minimum or above 730, which signals to lenders that you are a reliable borrower. Pay all bills on time and limit new credit applications to lift your score.
Evaluate Loan Amount
Apply only for what you need so lenders see you take borrowing seriously. Keep the loan amount under 30-40% of your annual income.
Compare Lender Rates
Research interest rates from multiple banks and fintech lenders. Comparison portals allow you to easily check rates from various providers.
Leverage Relationships
An existing banking relationship may help you negotiate a better rate or fees. But don’t limit yourself. Weigh all options.
Minimise Processing Fees
Many loan providers charge approximately 1-2% of the loan amount as non-refundable processing fees.
Enrol for Auto-Pay
Lenders give discounted interest rates when you enrol to pay EMIs by directly auto-debiting your bank account monthly.
Weigh Prepayment Options
Prepaying loan amounts earlier than the tenure can save significantly on interest costs. Compare prepayment and foreclosure policies across lenders.
Consider Secured Loans
If you own property or fixed deposits, banks may offer lower rates if you pledge them as collateral. However, only do this if you are comfortable with the temporary ownership transfer to the bank.
Conclusion
By evaluating these key factors across leading national banks, new fintech lenders, and NBFCs, salaried employees and the self-employed can secure access to the most affordable loan rates and terms tailored specifically to their financial situation.
