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.