Those who are self-employed often have a much harder time lending. If an installment loan is applied for the self-employed, in most cases no fixed income can be proven. For this reason, the self-employed have a bad reputation with banks and often have to pay much higher interest than employees.
An installment loan for the self-employed for private or commercial purposes
There are two types of installment credit for the self-employed. It can be applied for as a loan to a private individual. Then the money can be used for any purpose, for example to finance a holiday, a new facility or for business. The other variant is earmarked. The application must be specified when applying, for example for a car loan or a construction project. With the second variant, it is possible that the conditions are somewhat better.
Higher risk for the banks
An installment loan for the self-employed means an increased risk for the banks because there are hardly any options for action if the installments are not paid. There can be no assignment of salary because the income varies. However, there are still some banks that understand the situation of the self-employed and grant loans.
It may be helpful to have assets or other collateral that can be deposited with the bank. The alternative can be private individuals who, like banks, make their money available in the form of a personal loan. They decide independently whether the company appeals to them and whether they want to provide an installment loan for the self-employed. It is often easier to convince these individuals of a project than a bank.
Conditions for an installment loan for the self-employed
A few banks offer an instant commitment for such a loan. It is more the rule that the data and creditworthiness are checked by the bank in advance. The minimum loan amount is between 960 and 30,000 USD, the maximum limit between 35,000 and 100,000 USD. The term can usually be made variable in a period between 12 and 84 months. Some institutes offer a longer term of up to 120 months. The interest rate varies between 2.85 and 5.99%. The data apply to bank and personal loans.