Loans for Part Time Employed Workers
- 19 February 2018 | 699 Views | By Mint2Save
A part time job needn’t be a low paying small job in a supermarket. It can also be high end website maintenance and mobile app coding. People work part time as freelance artists, hosts, programmers, tutors. These professions are high skill and education oriented and even though they can be part time, the remuneration, is certainly respectable.
We are now witnessing a new era in globalisation, where freelancers connect as part timers via various websites such as Fiverr, Freelancer, Workshift etc. If you have visited any of these websites, you might understand how much money a part timer can reap. While these are merely online options, offline options of tutoring, coding also reap good revenue.
It can be now ascertained that the employment status is not the prime requirement for getting finance.
In the earlier days, banks and finance companies used to refrain from providing any sort loans or advances to the part time employed.
Now, with finance revolution knocking all the time, lenders have become quite optimistic in providing loans even to the part time.
In this article, we shall explore various dimensions and necessities relating to availing loans for the part timers.
- Need: Out of many obvious reasons for getting loans, part timers may have a few specific ones, such as buying a vehicle, upgrading equipment for work or even meeting out exigencies.
- Type of Loans: As per the requirement, several types of loan products are being offered. These include vehicle loans, gadget loans, loans for business development, personal loans, etc.
Pre requisites for Loan
Just like any other loan, there are a few pre requisites to be met when applying for the loan. While they might vary from lender to lender, here are a few which are needed almost every time:
(a) Income Proof: Those who are employed part time need to show the documents confirming employment. This includes an offer letter, salary slips, annual salary statements, tax deduction certificates etc. Income proof would serve as a proof for income consistency
For those who are self employed as part timers, a work contract would do. If there is no work contract, income tax returns become the prime source.
(b) Bank Account Statement: Your account statement is the modern proof of your standard of living. Lenders usually need a 6 month to 1 year account statement as a process of verifying your income, getting a track of your expenses and verifying if you have other debts running apart from the loan that you have applied for.
How Does Bank Calculate Repaying Capacity for Loans
For any retail loan, such as housing, mortgage, car or personal loan, a bank roughly follows the procedure mentioned below:
- Most banks work on loans only when the prospective customer reaches a threshold level.
- Post reaching the threshold level, 40-60% of the average monthly income is taken.
- Rest amount is assumed to be needed to fulfil day to day necessities.
- Out of the 40-60% amount taken, all deductions are taken into account. What is left after these deductions, is taken as the EMI of the loan proposed.
- This EMI, when used with proposed rate of interest and tenure, gives the principal or the loan amount, which can be granted to the customer.
- This process is referred to as Fixed Income to Obligations Ratio (FOIR)
Loans for the part timers
Loans for the part time workers also goes through the same process as mentioned above. However, more focus is towards the education level and work experience. It is very important that the part timer yearning for the loan has a good credit score and some considerable net worth.
It is interesting to note that this process is also used by credit card and other line of credit service providers.
Thus, we can see that loans for the part time is now an easy task which can be accomplished with good income, nice credit score and by fulfilling some formalities.