Payday loans are common among the 9-5 working class. They are sure of getting the salary credited in their account. However, the same is not true for freelancers. The workload is common but the payday is not. The lenders shy away from giving loans as they suspect loan default.
Even before the loan approval, it gets tough to prove that you have a steady income. Many lenders do not have provisions for self- employed. This creates a misconception that freelancers can’t take a payday loan.
According to recently released data, the USA is home to 56.7 million freelancers! This figure is rising and will grow in the future too. The technological advancement has allowed workers as well as companies to promote freelancing. It is a cost-effective way. The workers earn handsomely.
They have the opportunity to work with multiple companies at the same time. Just because you are a freelancer, does not mean that you will not need emergency cash in the middle of the payment cycle. The misconception around the income of freelancers creates problems here.
When do you need a payday loan?
Payday loans are small amounts. It is usually $1000. Typically a freelancer needs to take this loan if:
- They have a medical emergency. It is impossible to pay for costly medical treatments in the absence of a good money backup.
- Their laptop gets defunct. Most freelancers work through their laptops. Even if their profession does not demand it, they need it for keeping their bills and communications. If the laptop needs replacement or repair, it requires extra money. A payday loan helps here.
- They are just starting in this field. Going freelance requires a good investment in the beginning. You need to make arrangements to do your work full-time, manage finances and pay bills. You may need to invest in good tools, software, and a work station. Many firms do offer a work station for freelancers. Such places have high-speed internet facilities, sitting area, and food facilities. However, simply starting too requires investment. A freelancer needs a loan to get started too.
- They need a home renovation. People usually need a home renovation after every winter and rainy season. The snow and rain make the roof weak. In many instances, these requirements come suddenly. Taking a small loan is the only option.
- Self-employed people too can have personal reasons like a wedding or a vacation. Their savings may not be enough to meet the demands. A payday loan eases out the financial burden.
What are the conditions for availing payday loans?
Usually, the lenders ask for below-mentioned credentials:
- A steady source of income: You have to prove that your source of income is steady. If you have been freelancing full-time, this is easy to prove. Your bank statement will serve as proof.
- A guarantor: Since lenders do not believe in the steady income of freelancers, having a guarantor helps. Take a person in the conventional workforce. Their account statement will help you in getting a loan.
- Proper IDs: A lender needs your social security number, your ID and other personal details to give out the money. Always provide these details to the best of your knowledge. Do not forfeit any document.
Should I go for a payday loan if I am a freelancer?
Absolutely! Just because you are a freelancer, it does not mean you cannot take a loan. Moreover, the amount is usually low and is easier to pay back. However, you should keep a check on your requirements. You should not take this loan unless it is urgent.
What are the benefits of taking this loan for a freelancer?
The major issue that a freelancing profession has is an unstable income. You may have a good-paying project for two years in a row and suddenly not work at all. At the same time, freelancers do have the opportunity of earning without an upper cap. It is not a fixed amount paid at the end of the month. This unpredictable income sometimes gives rise to emergencies that can be resolved by taking a loan.
Taking a payday loan has following positive aspects for a freelancer:
- Availability in emergencies: If you are a newbie freelancer, you might not be having a savings account. You do have bills to pay but your projects’ income is insufficient to meet the needs. Taking a payday loan is an intelligent decision. The loan is credited within 24 hours in your account. You can get them online too. Also, just entering loans near me in a search engine will give you multiple options. Its easy availability makes it ideal for emergencies. You can pay back the loan at your convenience.
- Flexible down payment options: Payday loans are small amounts. It is easier to pay them back. Freelancers can break down the whole loan in small and easily achievable installments. It will allow them to pay back even if they are a bit low on projects.
- No credit check required: Most payday loans do not require a credit check. This is a boon for self- employed people. It allows them to take a small loan without being affected by the previous loans.
What should freelancers avoid while taking a payday loan?
Freelancers need to take these precautions while taking a payday loan
- Useless loans: A freelancer needs to carefully gauge if they need this loan. They should keep in mind that they do not have a fixed income. They will get their payment only after completion of projects. So they should abstain from doing binge shopping.
- Piling up of loans: If you think that you can take multiple payday loans and repay them once you have a high paying project, behold! This is not the right way to take loans. You should pay back each loan before taking another. Piling them will put a financial burden.
- Unplanned finances: If any profession needs serious financial planning from the start, it is freelancing. You should have a savings account, an emergency account, and a running account. Invest some money in each of these every payment cycle. It will ensure that you have proper money backup. Even if you need to take a loan, you have a source to pay it back.