Personal loan tips for the self-employed

Personal loan tips for the self-employed


People who are self-employed are in a unique situation when it comes to taking out personal loans. As a guide, here's what to look for when seeking a loan provider, and here's how to get yourself in the best financial shape possible when applying.

Be organised and informed about your finances
If you're self-employed and have fluctuating income, or you’re reliant on different sources of revenue, do your research to see what might be accepted by lenders as alternative forms of earnings, including revenue from rent, shares and other investments.

It is also important to show some proof of savings, as well as a good credit history. Savings, both genuine and non-genuine, can be in the form of funds held in a bank account or in a term deposit for over six months.

To support your application, the key is to be as organised and as diligent with your financial records as possible and have these documents available for at least up to six months. Ensure also that your tax returns are accurate, up to date and paid in full. 

Plan for future lean periods
The often unpredictable nature of self-employment means that downturns and lulls in income can and do occur, which can potentially impact loan repayments.

To prevent falling behind on repayments and risking any penalties, when you’re shopping around for the right loan, it could be helpful to look for ones that allow flexible repayments. This can help ensure that you have the flexibility to make extra repayments during periods when your income is regular, and to compensate for the lean spells.

The ability to draw down on money already repaid can be invaluable to self-employed borrowers. If your income levels are particularly precarious, another option could be to seek a loan that allows you to take repayment holidays during periods of low income. Pepper Money doesn’t currently offer drawdowns on personal loans, please contact one of Pepper’s Lending Specialists on 1300 659 430 to learn more about our products.

What to look out for in a lender
Self-employed personal loan applicants should look for lenders that offer flexibility, are understanding about an individual’s circumstances and are sensitive to a borrower’s unpredictable financial future.

If you’re self-employed and considering applying for a personal loan, things to look for in a lender might include:

  • Whether the lender accepts alternative documentation for credit approval.
  • Flexibility regarding repayment periods, drawdowns, payment holidays and recognising alternative sources of income.
  • A lender that offers fixed or variable interest rates on their personal loans.

Simplicity, flexibility and clarity are the essential ingredients for anyone who is self-employed and looking to apply for a personal loan. Learn more about Pepper Money Personal Loan products here, or apply now. 

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