When it comes to loans for the self-employed, it is often not easy to find a suitable bank. There are offers for this group of people, but these offers are often overpriced. Some providers do not have loans for the self-employed. But others have adjusted to these people and are ready to grant a loan. To do this, the applicant must meet certain conditions to apply for the loan.
Why are bad conditions given?
Self-employed people still have a reputation for not making a lot of money and not being good with finances. Not all banks think so, but for this reason there are numerous credit institutions that only grant loans to the self-employed on poor terms. They think that they are minimizing the credit default risk and are paying for it with expensive interest. This need not be! If the borrower can demonstrate good creditworthiness, he will also receive favorable conditions from the bank.
What are the requirements?
The self-employed must submit their business figures and the latest bank statements to the bank. In addition, the applicant must agree that the bank checks the private credit checker entries. Banks always work with private credit checker because this is the best way to check their creditworthiness. If this turns out to be good, then loans for the self-employed are often granted without problems. The better the applicant’s creditworthiness, the better the chances that interest rates will be low.
What to do if your credit rating is bad?
A bad credit rating does not mean the end of a loan. This can be improved, for example with a guarantee. Any person can act as a guarantor as long as they have a salary that is above the garnishment limit.
The relationship between the guarantor and the borrower is irrelevant. It is important to have a good credit rating that the guarantor is over 18 years old and can demonstrate a permanent job. It is not always possible to find someone who takes over a guarantee. A guarantee is always an important step that has to be thought through. If the borrower is unable to pay its obligations, the guarantor has to pay the installments of the loan.
Another option is to present your life insurance to the bank so that it can be used as collateral. Ideally, the insurance should have a surrender value. This value should be able to cover the loan so that it can be used as collateral.