Availing of a collateral-free, personal loan may sound simple but they all require some form of documents concerning the borrower, to decide upon their credit performance, and whether they will be able to pay back the loan in given repayment period. Now, most banks and financial institutions view both salaried jobs and self-employed jobs as secured and somewhat secured, respectively. And for that reason, banks like to assess persons based on their job background with required separate documents. In this article, we are going to know more about personal loan documents required for people hailing from self-employed backgrounds. how to edit a pdf
Documents required for personal loan of self employed persons
Self-employment can be running a business or working as an agent or owning a startup. In respect of time, salary, flexibility, and other important factors, the two major job sectors differ from each other a lot. Now, when applying for a personal loan, a self-employed person has to present the following documentation for quick approval of the loan.
Proof of identity
The borrower, who is applying for the loan, needs to have solid evidence to support his identity. The identity of the borrower helps the lender institute to keep a record, in case any fraudulent measure gets taken by the applicant. For that, every self-employed applicant is required to present any of the following documents. I.e. Driver’s license, pan, aadhar or passport etc.
Documents that are collected from the loan institute while the initial inquiry about the personal loan process is mandatory. These are mainly loan applications. Also, a self employed person should present his 1 piece passport size photo.
Proof of address
This is another basic requirement at all financial institutes, that the applicant must provide their home address proof with other documents. Submitting the proof of address eases the worries of the lender and helps the applicant get a collateral-free personal loan. As the proof address, a borrower can submit any one of the following documents such as passport, utility bill, aadhar card, ration card, etc.
Proof of occupational centre
In case of any misconduct or any emergency, if the applicant is not available at home, then their workplace address proof should be included. Occupational center addresses are also taken, because of concluding further investigation about the borrower’s socio-economic status. The borrower should submit any one of the following documents, i.e. property documents, maintenance bills, utility bills, etc.
Proof of business
The existence of the business needs to be proved for further reference of the borrower’s repayment ability and to do that the borrower needs to provide any one of the documents showing the registration of the company, copy of tax registration, or shop establishment proof.
Proof of income
A person availing of a personal loan needs to at least have an income of 15,000 rupees per month. And to prove that, they must provide any document reassuring their actual income (read if can you garnish self employment wages) such as their last 6 months’ bank statement or their income tax return for the preceding 2 years.
A self-employed person must have at least 2 years of prior experience in his working field. Having this experience enables higher chances for quick personal loan approvals.
Job continuity assurance proof
A job is only important and motivational to its workers when it comes to job security. Lending institutes always consider people with extensive job security and risk-free borrowers.
Any of the following documents can be provided to prove job stability, such as a previous employer-issued certificate, or letter of recommendation.
In conclusion, different documents and certificates are needed before applying for smooth processing, and collateral-free personal loans. That is exactly why all the mentioned personal loan documents required should be kept close by all interested self-employed individuals.