Working as a freelancer or a gig worker is so thrilling. It’s a good way to earn income as you work on your terms. Studies show that the number of active freelancers has skyrocketed tremendously. This is especially true for those folks in the low-income brackets and young individuals.
Essentially, a gig worker earns income by doing contract jobs. They also file taxes as self-employed. Securing a loan for gig workers can be quite a challenge because they can face strict loan requirements, high interest rates, and sometimes outright rejections. Due to that, gig workers must always work super smart and extra hard to be able to acquire the same personal loan options, just like traditional employees.
If you are a freelancer or a gig worker looking to secure an instant personal loan, these are some tips to help you navigate this process as a pro.
Strategies to Help Freelancers or Gig Workers Secure Loans with Ease
The introduction of the gig economy has changed the traditional employment world. More people are now introduced into this freelancing landscape with independent contracting. Even though this aspect brings flexibility, it can also be a challenge financially, especially when it comes to securing a loan. Gig workers may find it hard to get an emergency loan when an emergency strikes. There are some strategies that can streamline the process of securing a loan. They are as follows;
1. Organize your finances
Gig workers or freelancers will find it challenging to prove their income earnings to their lenders. Unlike traditional employees who receive a regular salary from recognized government firms, gig workers are not employed by the government. Because gig workers don’t have a regular paycheck from a recognized institution or even a W-2 tax statement to prove their income, lenders find it hard to trust them. Due to this, keeping track of earnings and spending is very important for a freelancer. Apart from that, maintaining accurate financial records is helpful.
You can use apps to easily track your earnings and expenses. Be sure to also keep some copies of the tax returns you’ve made, the bank statement and any document that can show your financial creditworthiness.
2. Build a good credit score
Credit score plays a pivotal role in loan approvals. Before you can apply for a loan, make sure your score is good or excellent. Your score depicts how responsible you have been in the past. If your score is good, it shows you’ve been paying your debts on time. This will make the lender trust you with the loan.
However, a good credit score is not built in days or weeks; it can take longer. And, if you are a gig worker who’s just stepped into the industry, there is no credit history you can bank on to ease the process of availing a loan.
However, you can start building your credit score right away before you apply for a loan. To do that, ensure your bills are paid promptly, keep the balances of your credit cards as low as possible, get a secured card, don’t open many credit accounts simultaneously etc. When you do this, your credit score will be boosted in no time and help you secure an instant personal loan online with ease.
3. Look for lenders who understand landscape of gig workers
Lenders are different in how they work. Some may accept to work with freelancers. Make sure to find a lender who has experience of working with self-employed people and freelancers. A lender who knows how the gig working industry works will more likely understand your situation and approve your loan application.
4. Demonstrate consistency
Lenders want to see a consistent income. Showing a steady stream of income from your freelance work will help strengthen the loan application. In case of fluctuations in your income, have a good explanation of the same. Understanding all these is important for gig workers in securing loans.
Where Gig Workers Can Get Loans From
There are so many personal loan apps in India where gig workers and freelancers can get loans. The catch? You can access them online without paperwork. There’s no need to visit the bank or collateral needed. The loans are approved almost instantly if you are eligible.
The apps don’t have any restrictions on how you use the amount. Borrowers are free to use the funds for any expense they want. Whether you want to pay for medical expenses, you can freely do so. On the other, if you’ve been planning for a wedding, the money can come in handy.
Summary
Availing a loan as a freelancer or a gig worker needs you to put in extra effort. Luckily, it is not impossible at all. You just need to organize your finances, build your score, look for lenders who understand the landscape of the freelancing world and also demonstrate consistency in your income. Through this, you may increase your loan approval chances and help you achieve your dreams.
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