Gig workers enjoy freedom and control over their schedule and workload. But, It is difficult for gig workers to secure loans from financial institutions like banks since gig workers do not receive regular payrolls like regular employees. Thus, It takes a long time to get loan approval. However, there are several other options by which gig workers can get loans.
Options such as credit union loans, lines of credit, and personal loans for gig workers are available to provide them with financial assistance, but how do they get these loans? Stay tuned till the end of the article to know more about it.
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Various Types of Loans Available for Gig Workers
There are many loan options available for gig workers. Given below are the top 3 best loan options that you can avail yourself if you are a gig worker:
1. Payday Loan
Payday loans are ideal for those with a poor credit history but still need a loan. This loan is perfect for you if you require urgent funds until you receive your next paycheck. They have a high rate of interest, which is a disadvantage of payday loans. Also, if you cannot pay off payday loans within two weeks, you should avoid drawing a payday loan.
2. Personal Installment Loan
Anyone can get a personal loan Irrespective of their credit history. Such loans have an easy application, competitive interest rates, and a flexible payment schedule. If you are looking for funds on an urgent basis, then consider drawing a personal installment loan.
3. Microloans
You can opt for microloans if you need a small loan to help you carry on with your gig job. Microloan amounts usually go up to $35,000. They have short payment periods as well as charge lower rates of interest. You can get these approved quickly. It also helps you build your credit history, as the major credit bureaus track most microloans.
Parameters to qualify for the loan
Banks consider many parameters before giving a loan to gig workers. Some of the parameters:
- They check whether you pay bills and other payments on time.
- They check the activeness and credit history of the bank accounts.
- They check how often you have applied different credits, including credit card balances, loans, etc.
- They also check the overall income-to-debt ratio.
Essential Documents for the loan application
Listed below are the essential documents that you need to submit to apply for a loan –
- A government-issued identity proof
- A residential proof
- Income Proof which can include your bank account statements and your tax documents
- Your bank account details and the social security number
- Permanent Address Proof
- Few references
How can Gig Workers get a quick loan?
Gig jobs do not guarantee a fixed income. Hence, you might face a financial crisis anytime if you solely depend on your gig job. This is when you can draw a loan to meet your immediate financial needs. You must go through the procedure to apply for a loan.
Firstly, you must submit all the required documents to apply for a loan. Then the lender will check your finances as well as your credit history. A detailed review of your credit history is done to ensure that you have provided the correct information about your financial position. They also check whether or not you are going through the pre-bankruptcy counseling or general bankruptcy process.
Once they have checked all the documents and verified your financial position, they decide whether they can approve a loan. If your loan is approved, then while signing the agreement, you must read the agreement papers correctly, and if you have any doubts, then you must clear them with your lender.
The Final Words
The gig economy is growing fast, so many people are taking up gig jobs either as a side hustle or as their main job. The most significant disadvantage of a gig job is that it does not guarantee a fixed income, which makes gig workers vulnerable to financial downturns. However, this makes them vulnerable to taking loans. However, gig workers are often denied loans because they don’t have a fixed income. Nevertheless, gig workers can apply for the loans mentioned above. Thus, gig worker can keep their work going, despite the financial hurdles.
