Get Personal Loan For Self Employed Without ITR

Loans serve a wide range of purposes, from helping you fund your business to financing a marriage. For funding a business venture, there are multiple options, like business loans, MSME loans, various government schemes, etc. Likewise, for covering personal needs, a personal loan is the most widely chosen option among people. It is an unsecured form of loan that doesn’t require any collateral or security deposit and can be sanctioned to an individual best on the credentials. 

Personal loans can only be given to salaried individuals and self-employed individuals.

However, getting a personal loan for a self-employed person without an ITR is not at all an easy job. Not all banks provide this privilege to all borrowers, and even if some do, there are special things you should consider.

Is it possible for a self-employed individual to get a personal loan without ITR? The objective answer to this question is yes, but to get an elaborate answer, you have to glance through the article. This article is all about the process through which a self-employed individual can get a personal loan without ITR.

Can a self-employed individual apply for a personal loan without ITR?

Well, the answer is yes, but there are certain additional requirements that one needs to look after. But before that, you have to understand the importance of ITR in a personal loan. An ITR acts as income proof, showing your income earned and the tax you paid on it in a financial year. For getting any type of loan, an ITR is a mandatory document that needs to be completed.

Since the inception of the personal loan, it has always been easy for salaried individuals to apply for a loan. For self-employed people, getting a personal loan has been comparatively difficult as they have to go through lengthy paperwork and provide additional documents while applying. Since self-employed persons do not have a regular income, lenders see it as a risk to lend money to these individuals.

You cannot obtain the minimum eligibility for a personal loan without an ITR. However, there are still some ways that will help you settle for a good credit line even if you lack ITR.

How can self-employed individuals get a personal loan?

Here are some points to consider before taking out a personal loan without ITR.

1. Looking for a secured loan:

As a personal loan is an unsecured loan, it means that you don’t have to pledge any of your assets to get a loan, provided that you have an ITR. But lenders find it risky to give loans to self-employed individuals who don’t have an ITR. However, to increase their trust, you can opt for a secured loan, which means you keep an asset as collateral and use it as a means to get the loan.

By pledging your assets (property, stocks, etc.), you minimise the risk of defaulting and owing the lenders.

2. Showing another proof of income:

Instead of showing your ITR to the bank, you can replace it with your bank statement, which will show your credits, rental income, parental income, income from investments, etc. These are good substitutes for the ITR, and your lender might not find it difficult to disburse the loan amount.

3. Improving your credit score:

Your credit score plays a significant role in determining your eligibility and credibility for the loan. A good credit score is always a plus because it helps you get a larger loan at a lower rate of interest. A credit score of 750 or more is considered idle for most loans. You can improve your credit score by paying your bills when they are due, keeping your credit card balance low, paying your EMIs regularly, etc.

4. Negotiations:

Negotiation plays a decent role in deciding whether the lender trusts you regarding the loan repayment or not. Good negotiation skills will not only help you get a personal loan without ITR but will also help you establish a good relationship with the lender. For example, if you have a long-standing relationship with your bank, you have a better chance of obtaining a personal loan even if you lack an ITR.

5. Clearing your dues on time:

A good track record of your previous debts is a good way to make the lender believe that you are going to repay on time. If you have unpaid debts from the past, you should pay them right away. You can use that as a document when applying for a personal loan. For instance, if you have a credit card, you can use it to pay your bills, and you can show that as a record while availing of a loan.

What are some things to keep in mind while getting a personal loan without ITR?

Apart from covering the above-mentioned requirements, you should keep some things in mind.

• Not every lender allows this.

You might balance it out with some other substitute documents and eligibility, but an ITR still plays an important role in showing your repayment eligibility. So, not every lender will be willing to take that risk.

• You might not get additional benefits.

Even if you are sanctioned for the personal loan, you still pose some risk to the lender. As a result, you might be prevented from receiving certain perks that other borrowers with ITR will receive.

In conclusion

For getting a personal loan without ITR, you need some additional documents and other substitute documents in place of income proof. Besides that, you have to focus on increasing your CIBIL score, clearing your debt, and aiming for a clean track record to minimize the risk you pose to the lenders regarding the repayment of the loan. If all that doesn’t work, you can choose a secured option, where you use collateral to get a personal loan. A secured loan is a better option to go with as it also prevents you from paying a higher interest rate.

If you have more queries regarding personal loans for self-employed and salaried individuals and you want to know more about them, you should opt for services from Piramal Finance.