Loans For The Self-Employed by Peter K
If you work for yourself, then finding a good loan deal can sometimes be difficult. With less means to prove that you have a stable income and so are not a risk, lenders are less inclined to offer you a good deal. However, with more and more people becoming self-employed this is changing, and there are some great deals around. If you are self-employed and need some help to find the right loan, then here are some useful tips to help you out.
Who is self-employed?
People classified as self-employed can be in a wide variety of jobs and pay categories. Anyone how operates a business as a sole proprietor, is a partner in a partnership, or an independent contractor, is classed as self-employed. If you also work in any role as a freelance agent, such as a consultant, then you are classed as self-employed also.
How to apply for a loan
Applying for a self-employed loan is much like applying for any other type of loan. All you need to do is have a decent credit history and be able to prove your income. How well you can prove your income will depend what business you are in and how long you have been self-employed. The better you can prove your income then the easier it will be to get a loan, which is why it is crucial to keep good business records.
What are the costs?
Although getting a loan if you are self-employed is becoming easier, the rates are still higher than for regular personal loans. This is because lenders see self-employed people as a greater risk, no matter how well they are currently doing. However, if you can show repeat contracts with clients over a few years, then you will be able to get a pretty decent loan rate. It is wise to shop around to look for the best deal, with a lot of the best deals being found online.
Loan insurance not worth it
If you are self-employed, don’t be fooled into taking out the loan insurance. Although you might be covered for accident or injury, you are unlikely to be covered for unemployment unless you have completely ceased trading. Instead, take out adequate business insurance specifically for self-employed people. This will cover you for a lot more things and will save you money on your loan.
Self-certification
One of the biggest problems facing self-employed people is that you are often legally understating your earnings for the purposes of tax, which will hurt you when trying to get a loan. Lenders look at how much profit you are making, which of course is going to be understated to reduce your tax burden. However, a solution to this is to self-certify the amount that you earn. This means you inform the lender how much you earn, but you don’t have to prove this with documentation. This will make it easier to be accepted for a loan, but will involve you having to pay higher interest rates. If you are self-employed, the easiest way to get a loan is to secure it against collateral such as property. Although you are putting the collateral at risk, if you know that you can pay the money back then it will get you a better rate and make the approval process easier.
Peter Kenny is a writer for The Thrifty Scot, please visit us at Debt Consolidation Loans and Bad Credit Loans
Visit http://www.thriftyscot.co.uk/
Article Source: http://www.superfeature.com
Showing posts with label debt. Show all posts
Showing posts with label debt. Show all posts
Monday, February 26, 2007
The Truth About Bad Credit Loans And Mortgages
The Truth About Bad Credit Loans And Mortgages by Chris James-5768
Many people will have the experience of facing financial difficulties at one time or another for a variety of reasons. Being a little short of money can result in you falling behind with bills, bank loans, credit cards, mortgage repayments and alike.
This in turn can lead to having defaults, County Court Judgements (CCJ’s) and even bankruptcy. Even if the problems are short lived they can still tarnish your credit record and make it difficult for you to obtain finance.
There are no accurate figures on the amount of people that get turned down for a mortgage from a high street lender, but it is widely estimated that it is about 1 in 5. Generally this is due to minor misunderstanding and can often be resolved. But even after this it is estimated that one in eight people will not be able to get a main stream mortgage and have to go to a specialist lender.
Why Do People Get Turned Down For Credit?
There are a number of reasons and situations for which someone will be turned down for a mortgage. It may simply be that the applicant has put down some incorrect details on the application form. Another reason might be that your previous landlord did not bother to confirm that you used to pay the rent on time.
Another more serious reason that people get turned down for a mortgage is that they do not have enough credit points. When you apply for a mortgage the lender will carry out a credit check on you.
You will gain credit points for a number of reasons for example if you have had the same address, job and bank account for a long time. Also people that keep up to date with repayments will gain points as well. But you will lose points if you have defaulted on debts, fallen behind with bills, have CCJs or have been made bankrupt.
What Can You Do If It Happens To You?
If you do get turned down for a mortgage or loan the first thing you should do is find out why. If you did fail a credit score the lender may not tell why, the credit agency that they used will know. It may be a mistake on their part, or an old default that should no longer be on your file.
The best thing to do is to get hold of your credit record from one of the agencies. The three main agencies are Equifax, Experian and Call Credit. If there is some kind of mistake then you can get it sorted.
Another reason that you may get declined a mortgage or loan is because you have not built up enough credit history. If this is the case then it might be an idea to take out a couple of good credit cards (there are always good deals to be had). Use them to purchase things and pay them off straight away.
What If You Have Had Serious Credit Problems?
If a high street lender turns you down for a secured loan or mortgage, then you will need to look towards the sub prime or bad credit market place. These specialist lenders have a vast array of bad credit loans to cater for people in a variety of different situations. Whether it is just a defaulted credit card that happened 12 months ago for £300 or a recent CCJ for which you still owe thousands. Whatever your situation is the chances are you will be able to find a lender.
Generally the worse your credit history is the higher the rate of interest you will pay, this is because you pose a higher risk to the lender. For example if you have two CCJs you will pay higher rate than someone who has a single default. The good news is that you have plenty of choice, there are thousands of deals out there for people with credit problems.
The easiest way to find a deal and suitable mortgage or loan product is to use a broker. The broker can carry out a credit search and based on the results they will be able to determine what your best options are. The majority of the bad credit lenders are not household names. Some of these lenders are owned by American companies and others are subsidiaries of high street lenders.
Getting The Best Deal
As previously mentioned the worse your credit history is, the higher the interest will be. If you have a light bad credit history, then as long as you keep up with repayments then you might be able to switch to a mainstream deal after two years.
If you have heavy bad credit history then you may have to wait three years before switching lenders. So for this reason it can be advisable to avoid products that tie you in for long periods.
So when the deal comes to an end, and you have kept up with your repayments you should look to move to a standard deal, possibly with a high street lender. Hopefully by this time your bad credit history will be long behind you.
Chris James enjoys writing on a number of areas in the finance industry. He is a bad credit loans consultant for Adderson & Co.
Article Source: http://www.superfeature.com
Many people will have the experience of facing financial difficulties at one time or another for a variety of reasons. Being a little short of money can result in you falling behind with bills, bank loans, credit cards, mortgage repayments and alike.
This in turn can lead to having defaults, County Court Judgements (CCJ’s) and even bankruptcy. Even if the problems are short lived they can still tarnish your credit record and make it difficult for you to obtain finance.
There are no accurate figures on the amount of people that get turned down for a mortgage from a high street lender, but it is widely estimated that it is about 1 in 5. Generally this is due to minor misunderstanding and can often be resolved. But even after this it is estimated that one in eight people will not be able to get a main stream mortgage and have to go to a specialist lender.
Why Do People Get Turned Down For Credit?
There are a number of reasons and situations for which someone will be turned down for a mortgage. It may simply be that the applicant has put down some incorrect details on the application form. Another reason might be that your previous landlord did not bother to confirm that you used to pay the rent on time.
Another more serious reason that people get turned down for a mortgage is that they do not have enough credit points. When you apply for a mortgage the lender will carry out a credit check on you.
You will gain credit points for a number of reasons for example if you have had the same address, job and bank account for a long time. Also people that keep up to date with repayments will gain points as well. But you will lose points if you have defaulted on debts, fallen behind with bills, have CCJs or have been made bankrupt.
What Can You Do If It Happens To You?
If you do get turned down for a mortgage or loan the first thing you should do is find out why. If you did fail a credit score the lender may not tell why, the credit agency that they used will know. It may be a mistake on their part, or an old default that should no longer be on your file.
The best thing to do is to get hold of your credit record from one of the agencies. The three main agencies are Equifax, Experian and Call Credit. If there is some kind of mistake then you can get it sorted.
Another reason that you may get declined a mortgage or loan is because you have not built up enough credit history. If this is the case then it might be an idea to take out a couple of good credit cards (there are always good deals to be had). Use them to purchase things and pay them off straight away.
What If You Have Had Serious Credit Problems?
If a high street lender turns you down for a secured loan or mortgage, then you will need to look towards the sub prime or bad credit market place. These specialist lenders have a vast array of bad credit loans to cater for people in a variety of different situations. Whether it is just a defaulted credit card that happened 12 months ago for £300 or a recent CCJ for which you still owe thousands. Whatever your situation is the chances are you will be able to find a lender.
Generally the worse your credit history is the higher the rate of interest you will pay, this is because you pose a higher risk to the lender. For example if you have two CCJs you will pay higher rate than someone who has a single default. The good news is that you have plenty of choice, there are thousands of deals out there for people with credit problems.
The easiest way to find a deal and suitable mortgage or loan product is to use a broker. The broker can carry out a credit search and based on the results they will be able to determine what your best options are. The majority of the bad credit lenders are not household names. Some of these lenders are owned by American companies and others are subsidiaries of high street lenders.
Getting The Best Deal
As previously mentioned the worse your credit history is, the higher the interest will be. If you have a light bad credit history, then as long as you keep up with repayments then you might be able to switch to a mainstream deal after two years.
If you have heavy bad credit history then you may have to wait three years before switching lenders. So for this reason it can be advisable to avoid products that tie you in for long periods.
So when the deal comes to an end, and you have kept up with your repayments you should look to move to a standard deal, possibly with a high street lender. Hopefully by this time your bad credit history will be long behind you.
Chris James enjoys writing on a number of areas in the finance industry. He is a bad credit loans consultant for Adderson & Co.
Article Source: http://www.superfeature.com
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