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Certain unexpected expenses test the liquidity of your funds. Naturally, it is not possible to stay prepared. A Personal Loan is an ideal option to resolve such financial needs. It is an unsecured credit option, unlike loans that require you to pledge surety. It demands a higher interest but is worth the cost owing to the convenience.
Lenders provide it to both salaried and self-employed individuals. However, there are key differences between them. Understanding the Personal Loan eligibility for the same help apply accordingly. Let us know the main factors distinguishing the applications for both: Eligibility criteria: The basic parameters like your age, income, credit score, employment, etc., decide if you qualify. The minimum and maximum age requirements are higher for self-employed as compared to the salaried. As there is an inherent instability in your earnings as a business owner or professional, you require a higher income to apply. This is not the case with a Personal Loan for salaried, as they have fixed income. All in all, there are stringent eligibility standards for self-employed than salaried employees. But they also get a higher interest rate in comparison. Requirements: Your age should be between 21-60 years to qualify for Personal Loans as a salaried employee. Contrastingly, the age criteria are 24-65 years for self-employed. This is because the retirement condition does not bind them. You need to have a minimum salary of Rs. 25,000 as a working individual. The self-employed, on the other hand, require a minimum of Rs. 35,000 monthly revenue. They also need to have a minimum turnover of Rs. 40 lakh. Documentation: Most of the paperwork is the same for every applicant. They are your ID proof, address proof, six months bank statements, etc. But the significant difference is in income statements. As a salaried individual, you submit three months salary slips, form 16, income tax return, employment letter, etc. If you apply for a Personal Loan for the self-employed, you need profit & loss statements, balance sheet, IT returns of two years, business registration proof, etc. Employment tenure: Your financial stability is just as important as your income. Hence, lenders evaluate your employment profile. If you are a salaried individual, they consider your experience and employer's reputation. You must have served at least two years in the current company. As for the self-employed, loan providers assess the business continuity. Your business should have existed at least for three years. Once you understand these fundamental differences, the application process becomes streamlined. You get clarity on the essential terms and requirements. Hence, make sure to check the same by visiting the lenders' websites. Also, try applying online to claim different benefits like managing applications through banking apps.
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October 2020
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