Tips for self-employed and freelancers to get better credit

Published by Nancy Reilly on

If you are self-employed and want to make more financial leeway with a loan, it’s not always easy. Even those who have been self-employed for some time now and are constantly in the black are not always getting a loan so easily. The reason that loan applications are often denied or self-employed only get their loans on unfavorable terms is the income that fluctuates from month to month. Some banks generally reject lending for the self-employed. The Internet is now making it easier for self-employed to get a loan, but there are still some hurdles to be overcome.

So you can apply for and compare your loans online

If you have applied for a loan with your house bank and have received a cancellation, you do not always have to give up hope for a loan. You should look around the internet and use the credit comparison. Some banks also lend to self-employed; the conditions are even better for the online banks than the branch banks. The direct banks on the Internet operate no or only a few branches, which saves costs. Many of these banks pass on these benefits to their customers in the form of lower interest rates. The credit comparison on the Internet gives you a comprehensive overview of the various banks and the terms.

As a contractor, make a condition request

Tips for self-employed and freelancers to get better online loans

Better online loans for the self-employed and freelancers.

If you have selected a favorable bank from the credit comparison, you should make a condition request there. You can address this condition request to several banks, it is not binding. In response to this request, you will receive information about the interest you must pay to each bank. A credit request in the form of a condition query has the advantage that your request is classified by the private credit as neutral. The situation is different when it comes to a loan request, because this is where the bank obtains information from the private credit. You should not submit a binding loan request until you have finally decided on a bank.

Before you submit your loan request, you should clarify whether, given your economic circumstances, you actually have a chance of obtaining a loan. Prerequisites for getting a loan as a self-employed person are a residence and a bank account in Germany. You must be of legal age. As a self-employed person you have to have your business in Germany to get a loan in Germany. Very important is the credit rating. You have better chances of getting a loan if your company has already existed for at least two years.

How self-employed prepare for the condition request

Not only before the binding request, but even before you request a quote, you should get an overview of your financial situation. You should look at your sales and earnings figures for the past two years. In the credit comparison banks are represented, with which the interest rates are determined independently of the creditworthiness of the customers. Other banks, on the other hand, charge interest rates depending on their credit rating. If the interest on the loan is raised depending on the creditworthiness of the customer, you can check how expensive the loan will be for you if the maximum interest rate is charged. In order to assess whether a loan is going to be expensive or cheap for you, you should know what the depreciations are in the current year and what contributions you pay to the health insurance company.

When submitting your loan request, you must submit various documents for the credit check. You should submit at least two tax assessments, and you should also submit a current business statement or annual accounts from the previous year to the bank. Although sales or profit figures can be estimated, you’ll make a better impression on the bank when you make a loan application there. In most cases, you will need to submit bank statements, a profit and loss account, a current balance sheet or a tax bill to your bank. However, the documents required are different depending on the bank. At Brycard Bank you only need to file an income tax assessment to obtain a loan. At the Tarbank further documents are required. You must prove since when you are self-employed. In part, a current income tax advance payment notice may be required in addition to the other documents.

Opportunities for the self-employed to apply for a better loan

As the interest rates for banks on self-employed loans are usually credit-related, it is not always easy to compare the conditions of the banks. You should therefore submit a condition request to several banks.

If you use your credit with a bank that charges interest-based interest, you can often benefit from a quick loan. That could be the case with the Brycard Bank. If your credit rating is very good, you often only have to pay a 1.99 percent APR for a loan with a total of 50,000 euros and a term of seven years. However, if the credit rating is only average, you have to expect the same loan with an annual percentage rate of 6.49 percent.

The ING DiBa offers installment loans for freelancers on favorable terms, but this does not affect the traders. The interest rates are fixed here irrespective of the credit rating, these are fixed interest rates. With a loan of 50,000 euros and a term of seven years, the annual percentage rate is 3.79 percent. The repayment can be very flexible at ING DiBa; the entire loan can be repaid in one sum, but you can repay partial amounts at any time in addition to regular repayments.

With peer-to-peer credit, there are many investors who can invest in you, so you often do not have to wait much longer for a loan than a bank. Even if you have a bad rating by the private credit, you often still have the chance to get a loan. The disadvantage, however, are the higher interest rates, as the risk is higher. After all, the annual percentage rate of interest for two-thirds of borrowers is currently 13.80 percent. The loan can be applied for up to a maximum of 25,000 euros, the term is limited to five years.


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