Being self-employed can complicate your plans if you’re trying to get approved for a personal loan. Most lenders want proof of steady income to demonstrate that you can repay what you borrow. You might need to supply tax returns or bank statements to prove your ability to pay. Your choice of lender can make a […]
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Being self-employed can complicate your plans if you’re trying to get approved for a personal loan. Most lenders want proof of steady income to demonstrate that you can repay what you borrow. You might need to supply tax returns or bank statements to prove your ability to pay.
Your choice of lender can make a difference when measuring approval odds. Several lenders offer self-employed personal loans to borrowers who work for themselves instead of a traditional employer. We’ll walk you through your borrowing options if you’re an independent contractor, gig worker, or small business owner.
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Lender | Rates (APR) |
Credible | 7.49% – 35.99% |
LendingTree | 5.99% – 35.99% |
LightStream | 7.49% – 25.49% |
SoFi | 8.99% – 29.99% |
Upgrade | 8.49% – 35.99% |
We’ve identified one marketplace and four lenders that offer personal loans to self-employed borrowers. To get approved for a personal loan with self-employment income, you must meet a lender’s criteria, including any minimum credit score requirements.
Lenders use credit scores to measure risk; the higher your score, the better your chances of being approved. A good credit score can also help you qualify for a lower rate.
Most lenders use FICO credit scores, which range from 300 to 850. Here’s how to tell what kind of credit you have.
Checking your credit can give you an idea of which lenders might approve you for a personal loan.
LendEDU rating: 5.0 out of 5
Credible stands out as the top marketplace for borrowers to compare loan offers from various lenders with just one application. Its platform is user-friendly, making it easy for users to navigate through different loan options, including personal loans, student loans, mortgages, and more. This ease of use, combined with the comprehensive selection of loans, secures its spot as a market leader.
One of the most appealing aspects of Credible is that it allows users to view personalized loan offers without a hard credit check, meaning it won’t affect your credit score to explore your options. This feature is beneficial for borrowers who want to understand their options without committing immediately.
Coupled with its customer-friendly support and educational resources, Credible ensures that users are well-informed and comfortable throughout the loan comparison process.
LendEDU rating: 4.8 out of 5
LendingTree provides a platform where borrowers can access and compare loan offers from different lenders. The ability to view multiple loan offers with one application saves time and empowers users to make informed decisions by comparing the terms and rates of different lenders.
LendingTree enhances the user experience with various financial tools and resources, such as credit score monitoring, which educates and assists users in managing their financial health.
LendEDU rating: 4.8 out of 5
LightStream is the go-to lender for individuals with excellent credit, offering some of the most competitive interest rates in the market. It promises a superior borrowing experience or your money back. This focus on customer satisfaction, along with competitive rates, makes LightStream an attractive option for creditworthy borrowers.
The application process is straightforward, and you can complete it online, saving time and hassle. LightStream doesn’t charge any fees or prepayment penalties, which underscores its borrower-friendly approach. These factors, combined with the ability to fund loans as soon as the same day, make LightStream a top choice for borrowers seeking efficient and cost-effective loan options.
LendEDU rating: 5.0 out of 5
SoFi is the ideal lender for individuals with good credit. It offers competitive rates and favorable terms. The absence of loan fees—no origination fees, prepayment penalties, or late fees—makes SoFi attractive from a cost perspective.
Its commitment to supporting its members’ financial journeys, combined with its straightforward online application process and quick funding times, ensures a seamless and supportive borrowing experience.
LendEDU rating: 4.9 out of 5
Upgrade is the premier lender for individuals with fair credit, offering accessible and reasonably priced loan options for those who may not qualify with other lenders. Its dedication to transparency throughout the application process ensures that borrowers understand their loan terms, fees, and repayment options.
Beyond merely providing loans, Upgrade distinguishes itself with a commitment to helping borrowers improve their financial health. Through credit health tools and educational resources, Upgrade supports its customers in understanding and enhancing their credit scores.
This educational approach, combined with competitive rates and a user-friendly online platform, makes Upgrade a top choice for borrowers looking to finance their needs while also working on their credit health.
When applying for most types of personal loans, lenders can look at your credit score, income, and debt-to-income ratio (DTI) to determine whether to approve you. In that sense, it isn’t much different from applying for a personal loan if you work a traditional job. The main difference lies in how the lender assesses risk.
Lenders’ main concerns are whether you have enough money coming in to make monthly loan payments and how reliable your income is. The minimum income required for a personal loan can vary by lender. A good credit score, meanwhile, suggests you’re diligent about paying bills on time.
Lenders may ask for certain documents to prove how much you make and how often you earn income. You might need any or all of the following to complete the loan application:
If you have less-than-perfect credit or haven’t been self-employed for long, you might need to bring a cosigner or co-borrower on board. A cosigner reduces the lender’s risk because it can hold the cosigner responsible for the debt if you don’t pay. You could also qualify for a better rate if your cosigner or co-borrower has good, very good, or excellent credit.
A secured personal loan is also an option if you can’t find someone to cosign and have an item of value you could offer as collateral. Secured personal loans may charge lower rates because they mean less risk for the lender. Keep in mind that if you fail to repay the loan, the lender can keep your collateral.
Applying for a personal loan when self-employed starts with comparing lenders to understand the minimum criteria you’ll need to qualify and the type of loan terms you might qualify for.
Getting rate quotes from at least three lenders that offer self-employed personal loans can help you narrow down which ones you want to apply with.
Here’s an overview of how the process works when you’re ready to apply.
The best personal loan for you is one that allows you to borrow what you need at a rate you’re comfortable with and that you have the best chance of being approved for. Finding the right loan starts with shopping around to compare lenders.
Here are helpful questions to ask when choosing a loan.
Whether it makes sense to ask someone to cosign can depend on your credit score and income. A cosigner could make your application stronger, though not all personal loan lenders allow them. Keep in mind that if you fail to repay the loan, you could damage your credit as well as your cosigner’s.
A personal loan calculator can help you estimate your monthly payments with different loan terms. Choosing a longer loan term can result in a lower payment but means paying more interest overall. A shorter term can save money on interest but raise your payments.
Personal loans aren’t your only option to borrow funds. Consider the alternatives below before you decide which is the best for you.
Home equity loans can offer lower interest rates than personal loans because they use your home as collateral, reducing the lender’s risk. However, defaulting on payments could put your home at risk of foreclosure.
A HELOC is similar to a home equity loan, but instead of a lump sum, you have access to a revolving credit line. This offers flexibility a fixed loan can’t provide.
Credit cards can provide immediate access to funds, often at higher interest rates than personal loans. They might be beneficial for covering smaller expenses but can lead to high interest charges if balances aren’t paid off each month.
Using savings or cash prevents accruing interest expenses associated with a loan. However, it can deplete your emergency fund and leave you vulnerable to unexpected expenses.
The approval process for self-employed personal loans varies by lender. It can be as quick as a few hours or as long as a few weeks. The time frame depends on the borrower’s ability to provide necessary documentation demonstrating their income stability.
Yes, some lenders cater to borrowers with bad credit. However, the interest rate may be higher, and other requirements, such as a minimum income limit, may be stricter.
Lender | Rates (APR) |
Credible | 7.49% – 35.99% |
LendingTree | 5.99% – 35.99% |
LightStream | 7.49% – 25.49% |
SoFi | 8.99% – 29.99% |
Upgrade | 8.49% – 35.99% |
The post Self-Employed Personal Loans appeared first on LendEDU.