How to grab a personal loan if you’re self-employed in 2018

Ben Tosi   |   24 Jan 2018

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After years of carefully nurturing your side hustle, you’re ready to graduate into the freedom-filled level of self-employment - but what does that mean for your chances of landing a personal loan?

According to OECD employment data from 2016, approximately 10% of the Australian workforce are currently self-employed and while there are many perks - like being able to choose your own hours - working for yourself can often leave you with expenses to pay out of your own pocket.

But, without the weekly wage that comes with being more conventionally employed, personal loan providers can find it difficult to assess and lend money to those who work for themselves which means that self-employed people often struggle to secure loans, according to Mozo Product Data Manager, Peter Marshall.

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“People who are self-employed and therefore aren’t making regular tax contributions or have a regular, steady flow of income are forced to work harder for a personal loan,” said Marshall.

“It is really important, if you are self employed and applying for a personal loan, that you’ve kept on top of your finances and have kept bank statements that support your claim of income.”

Fortunately for self-employed Aussies, application processes for personal loans have become increasingly streamlined with some providers like RateSetter now advertising a turnaround time of less than 48 hours for most applications.

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But Marshall warned that, even with providers targeting this new workplace demographic, you’re far more likely to get a rate that is dependent on your specific situation.

“A lender has to assess the risk associated with your particular loan requirements and your current financial situation, so you are far more likely to get a customised rate rather than one that you’ve seen advertised,” he said.

Popular personal loans - rates updated daily

  • Promoted

    SocietyOne

    SocietyOne

    Unsecured Personal Loan - Excellent Credit (Fixed)

    7.50% p.a.to 9.99% p.a.

    9.51% p.a.to 12.71% p.a.based on $10,000
    over 3 years

    $300.00upfront and $0.00/month

  • Promoted

    Bank Australia

    Bank Australia

    Lifestyle Personal Loan (Variable, Unsecured)

    11.89% p.a.

    12.94% p.a.based on $10,000
    over 3 years

    $150.00upfront and $0.00/month

  • Promoted

    Australian Military Bank

    Australian Military Bank

    Unsecured Personal Loan - Excellent Credit (Fixed)

    7.93% p.a.to 18.87% p.a.

    8.77% p.a.to 20.27% p.a.based on $30,000
    over 5 years

    $100.00upfront and $10.00/month

  • Promoted

    HSBC

    HSBC

    Unsecured Personal Loan (Fixed)

    9.50% p.a.to 15.99% p.a.

    10.06% p.a.to 16.53% p.a.based on $30,000
    over 5 years

    $150.00upfront and $5.00/month

  • Promoted

    RACQ Bank

    RACQ Bank

    Unsecured Personal Loan (Variable)

    12.95% p.a.

    13.25% p.a.based on $30,000
    over 5 years

    $200.00upfront and $0.00/month

*The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years or a loan of $10,000 for a term of 3 years as indicated, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

Self-employed personal loan application tips:

  • Keep track of your income: If you can prove you’ve got a relatively constant flow of income, you’ll be far more likely to have your application approved. But it is also important to keep records for as long as 6 months of any debt you owe.

  • Clear your credit card debt: Not only is it a good idea to be on top of the debt you’re in, but to pay it off if you can. A personal loan provider will be far more likely to approve your loan if you’ve paid of your credit card.

  • Tally your tax: An easy way to prove your earning money is to show you’re paying tax. Even for loans that require less documents than usual, your provider will likely ask to see your last couple of tax returns.

  • Shop around: Self employed or not, shop around for the best possible rate and don’t just take the first one you’re offered.

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