Most loans require you to submit pay stubs to show that you are gainfully employed before they will approve your funds. But what about for those of us who don’t go to an office or punch a clock? Some people are self employed, or live on benefits, or have other ways of making a living that don’t print out pay stubs.
What are these people to do if they need an installment loan?
Loans for the Self Employed
Often times people confuse installment loans with payday loans.
Payday loans are tied directly to your next paycheck. When that check hits the bank, the lender electronically withdraws the funds you owe. So in that case, having verified pay stubs through your employer is essential.
Installment loans are different. They are more structured, more stable, and easier to pay off quickly.
They do require you to verify a regular income, but they are not as closely tied to pay stubs.
But to repeat – they still do require you to verify a regular income.
Fortunately, there are several ways to do this.
Self employed people still maintain separate accounts for their business and their personal matters. If you cannot produce pay stubs showing how much you make from your self employment, your bank records will still show how much income actually reaches your bank every month.
What the lender cares about is that you demonstrate a) that you make money and b) you have the ability to repay the loan. If you can repay the loan, the lender will not care where you work, or what you do for a living.
The Difference Between Personal and Business Loans
If you are self employed, you may actually find yourself with more options than other people.
If you own your business, you will also have offers for small business loans. Business loans might offer you a much larger amount of money. But beware! Unlike personal installment loans, business loans use your business as collateral for the loan. If there is any problem repaying that loan, your entire business could be in jeopardy.
With an installment loan, the money is leant to you directly, separate from your business. If there are any problems or concerns, it will not impact your business in any way.
The Best Self Employed Option
Your financial situation is unique, and you should always look into all your options. After all, no one knows what works best for you except you!