Not all banks offer a loan to freelancers because their income is less secure than that of employees. Young professionals in particular often have great difficulty in finding a suitable loan. However, some credit institutions are willing to provide money to freelancers at times.
Conditions for a loan
Anyone wishing to borrow money from a bank must prove that they have a regular income. While employees can submit their payslips, processing a loan for freelancers is a bit more complicated. Some providers require at least two to three income tax assessments, which is why new entrepreneurs have little chance of getting a loan. Almost every bank requires at least one tax assessment.
After all, lending is always associated with the risk of default. Accordingly, the lender requires certain collateral. Real estate, life insurance and other assets can increase the chances of the application being approved. However, a loan for freelancers is usually associated with higher interest rates due to the greater uncertainty compared to installment loans for employees.
In general, freelancers have a much harder time getting a loan. This applies regardless of the industry in which they operate. For example, a specialist with good practice is also considered a freelancer and has a similar difficulty in borrowing as a freelance artist who actually has an irregular income. An overdraft facility is also far from being made available to self-employed and freelance professionals at all banks.
Some credit institutions only offer a loan for freelancers with the restriction that it may only be used for private purposes. For example, a vacation trip can be financed, but no loan is granted for the new computer. However, as more and more people are self-employed in freelance professions, it is quite possible that this customer group will become more of a banker in the future. Until then, freelancers must be well informed about which banks they are welcome as customers and receive good conditions.
Credit calculation as a freelancer
The calculation of a loan for freelancers is complicated by the fact that the income often fluctuates significantly between the individual months. When calculating, it makes sense to orientate yourself to the weaker times and to check which repayment rate is affordable even with a rather low order situation.
If the loan has been approved for freelancers, it is advisable to save part of the income from strong months for possible financial bottlenecks. This ensures that the repayment rates can be paid at any time. In case of doubt, despite higher interest rates, it is better to choose a slightly longer term with low rates in order to minimize the risk of default.