If you are self employed , you may have found it difficult to get a secured loan.This is because, unless you have some form of accounts or accountants reference, tax return, essentially you have no proof of income. This makes you a greater risk, from a lenders point of view.
Lenders are concerned with a return on their loan,and if you cannot prove your income, there is a level of uncertainty as to whether you can afford to repay it.All lenders use a complicated form of risk analysis, to ascertain their level of risk when offering loans,the greater the risk, the greater the rate of interest.That is why, generally, if you are self employed you will pay a higher rate of interest on your loan.
There are several factors which will effect any application for a self employed person, such as length of time self employed, type of self employement and the amount of income.Obviously, the longer you have been self employed, the more proof the lender would expect.
Self employed people can self certify their income, and this has become increasingly popular in recent years. Self certification comes in various forms and is dependant upon the lender. Some lenders will allow you to self certify upto
a certain amount, ie ?40,000 without any proof of income, some will allow higher values. In recent months, the options have become limited due to the problems within the american market, this has led to lenders tightening their criteria, especially within the self employed / self cert market.
Ideally, if you are self employed, then 2 years accounts or an accountants reference will help greatly. Even if you have neither, then you still have options, and this is where a good secured loan packager can make a big difference.
A packager will have the criteria for their lenders and will save you hours of wasted time and numerous credit searches, which can effect your credit score, to help you get the loan your looking for.
