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If you are a self employed tradesperson then taking out a loan may be more difficult. Lenders often prefer those of us who are employed with a stable income, while the self employed tradesman may have an income that fluctuates more depending on time of year and what work they have booked in their diary.
Here at Approved Trader we are able to help give tips on helping trades people and the self employed get a loan.
Keep good accounts - When you apply for a loan the lender will be looking at if you are able to keep up your monthly repayments, by submitting detailed accounts of what you are earning the lender will be able to make the correct determination of whether to approve the loan application.
Ensure you are on the voting register - Lenders like to see that you have attachments to your property, although most lenders prefer home owner as borrowers, if you are on the electoral register this will greatly increase your chances of being approved for the loan. The amount of time you have lived at your current address can also help improve your credit rating helping you get a better rate for your loan agreement.
Keeping up your repayments on your existing credit commitments - Nearly every loan, mortgage and credit card report back to credit agencies such as Equifax, callcredit and Experian. When applying for a loan, lenders check these agencies to ensure that you are keeping your existing credit repayments, if you are then this will help you get a loan at a reduced interest rate, while if you have missed payments of CCJ`s in your credit profile this could result in a higher cost for your loan or even result in you getting declined for your loan.
Why do you want the loan Self employed borrowers may be needing finance for a number of different purposes, from personal uses such as making home improvements, taking a vacation or buying a new car. Alternatively self employed trades people may also be looking for finance to improve their business, to purchase new tools or equipment, buying a new van or taking out advertisements to publicise your services. It is important to ensure you know what the loan purpose is as there are different lenders for business and private loans, with different lending criteria finding the appropriate lender will increase the chances of you getting the best loan rate and getting approved for your finance.
Self Employed Mortgages Loans are usually used to raise money for a lower amount with personal loans going up to around £15,000, if you are a homeowner wanting to borrow more than £ 15,00 then a mortgage may be a more suitable finance option. It is important to note that mortgages are secured on your home so your home may be at risk if you do not keep up your mortgage repayments.