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Loans for the Self-Employed

There are many advantages to being self-employed, including setting your own hours, pricing structures, and the flexibility to turn down less attractive work. But one particularly difficult aspect of the job is obtaining funding, particularly for those who are relatively new to the self-employment workforce. Without a few years of proved income, it can be difficult to prove to a lender that you are not a liability.

The good news is that more self-employed workers in the UK are being approved for loans and mortgages. In fact, self-employed people are now just as likely to be able to obtain a loan as those in "traditional" employment settings, thanks in part to advances in underwriting. Technology and the ability to quickly share consumer data between credit reference agencies and lenders have improved lending abilities for self-employed persons. This technology makes the entire process more efficient, and therefore faster.

The increased availability of lending options is also related to the role of the credit reference agency combined with the ability to rapidly transmit information. If a referencing agency provides a good reference, then the consumer is not as likely to have to prove income--and this means there is a good chance that person will be able to get a loan. Technological advances also mean that all consumers, not just those who are self-employed, will be able to obtain a decision from the lender immediately.

More and more people are self-employed these days, which in turn creates competition among lenders to obtain the loans from demographic. It also means that loans for self-employed workers are now much lower than previously available. Now may be a good time for those seeking a new loan or changing an existing loan to one with better terms and interest rates.

One issue the self-employed businessperson will need to consider when conducting comparison-shopping is whether you are seeking a secured or unsecured loan. A secured loan is one in which collateral is used to guarantee the loan. This is often a home or automobile. Unsecured loans are becoming easier for self-employed persons to obtain, and may be the wiser choice, particularly if the loan is used to support the business.

Because self-employed people are no longer stuck with only a few lending options, shopping around for the best terms can be cost effective. Many loans offered through online sources have better rates and terms due to the decreased paperwork costs associated with more traditional loan options.

 

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