Loan REJECTED: Self-Employed

Aug 5, 2014 Blog  Personal Finance

With all the paperwork, cross-checks, back-checks and red tape, applying for finance can often feel like navigating an obstacle course. However, if you’re a freelancer, or self-employed, these same hurdles become even harder to overcome.

If you answer to the above titles, and have ever tried applying for a mortgage or a personal loan, you’ll know the process can be painstaking. The level of scrutiny you’re subjected to might seem like too much for anybody to bare. Sadly, banks view you as high-risk, and aren’t exactly jumping to finance your home, your holiday or your latest business venture. No matter how much money you earn, or the frequency of money coming into your account, when applying for a loan you’re still at a disadvantage to your full-time and permanently employed counterparts.  And this is why:

  • In contrast to freelancers and entrepreneurs, fulltime employees earn a fixed salary, as quoted by monthly pay slips. This fact plays an important role during the finance application process, as it allows the bank to make an informed assessment on this individual’s ability to repay the loan. With the absence of a payslip, the self-employed are seen to have a lower level of certainty.
  • People who work for themselves often don’t earn a fixed salary – instead the amount coming into their bank accounts could differ from month to month. Therefore, it becomes difficult for the bank to ascertain whether you’ll be able to afford the loan repayment throughout the higher and lower earning months.
  • Because of the changing nature of income, and the absence of a monthly record of earnings (a payslip), the self-employed are subject to a higher level of scrutiny from the bank. To establish your ability to repay your loan, the bank measures and asses your income over a period of time, leading to a lengthier application process and even more red tape.

So it’s clear to see that applying for finance can be a headache for anyone who is self-employed and, up until now, the dealing with a bank was your only option. However, since peer-to-peer lending has revolutionized the credit market, your choices have just become wider.   Simply put, peer-to-peer lending is an online platform that connects people who want to borrow money with people who have money to lend. And one such service provider is called RainFin.

Relatively new to the South African market, RainFin is all about community. It provides a safe online platform that not only puts you in contact with a potential lender, but effectively manages the process from beginning to end.  And one of the ways it makes borrowing much easier and hassle-free is by providing a quick and painless application process.

How it works: 

  • As a first step, you go to www.rainfin .com to set up a profile. This involves a comprehensive, free credit check and a clear description of your credit score.
  • After the credit check, you’re then able to apply for and describe your loan to possible lenders.
  • And once that’s done, you simply have to sit back and wait for the right investor to come your way.

Benefits of RainFin

  • You’re NOT at a disadvantage simply because you’re self-employed or a freelancer.
  • Effectively cuts out the middle man or credit provider.
  • Borrowers get potentially lower interest rates
  • Provides a simpler and more streamlined application process, thus eliminating all the red tape.
  • Helps you manage your debt.

So if you’re not traditionally employed, and your bank is making you jump through hoops trying to prove your ability to pay-off a loan, perhaps it’s time to consider a different option. Why not log onto and let them take the hassle out of borrowing by putting the power back into your hands?

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