Have you been self-employed for a little while now and you find yourself needing a short-term instalment loan just to tide things over? What if you have bad credit at the same time? Welcome to BestShortTermLoans’s guide to instalment loans for self-employed with bad credit.

In this guide, you’ll find out:

•  what is the definition of self-employed?
  what is the definition of bad credit?
•  what are instalment loans?
  what protection do you get with instalment loans?
  which lenders like to work with the self-employed who have bad credit?
  how much can you borrow on an instalment loan for self-employed with bad credit?
  can you take out an instalment loan to fund your business?
  should you use a broker or go direct for an instalment loan for self-employed with bad credit?

What is the definition of self-employed?

It depends. For most lenders, someone who is self-employed earns the majority of the money they earn not from an employer. When you work for an employer, you get paid at the end of every week or month and receive a payslip showing how much money is being deducted for tax and National Insurance.

Someone who is self-employed will generally send an invoice to their clients to get paid. They receive payment direct from their clients with no deduction made for tax and National Insurance. On 31st January each year, a self-employed person has to submit a Self Assessment form and pay their taxes and National Insurance.

A self-employed person may be a sole trader, a member of an unincorporated partnership, a member of a limited liability partnership, or a director of a limited company in which they own shares.

What is the definition of bad credit?

“Good credit” and “bad credit” mean different things to different lenders.

When a lender is making a decision about whether to give a loan to a borrower, there are two things they take into consideration – the details you submit on your application form and your credit report.

Think of what’s on your application form as you telling a lender about yourself today. You’ll let them know how much you earn, what you spend every month running your household, your address details for the last three years, and so on.

Your credit report shows them how well you’ve been paying your bills (including any other loans or credit cards you have out now), how big the balances on your credit cards are compared with your limits, and so on. Your credit report shows a lender how reliable you’ve been in the past making repayments and meeting your obligations.

The lenders that you apply to will look at all the information you’ve sent them. They’ll make a good estimate as to how much spare cash you have available at the end of the month and whether you can comfortably afford the repayments from that spare cash.

Each lender has a different definition of “good credit” and “bad credit”. While you may get turned down by one lender because you don’t meet their “borrower profile”, you might easily fit into the “borrower profiles” of other lenders.

That’s why it’s always worth applying. It’s always worth asking the question, especially if you need a bit of short-term help.

What are instalment loans?

An instalment loan for self-employed with bad credit is a loan that you pay back over a period of two to twelve months. The money is paid into your nominated bank account and then you make the repayments from that same account (sometimes via a debit card).

What protection do you get with instalment loans?

The instalment loans for self-employed with bad credit we offer at Best Short Term Loans come with additional Financial Conduct Authority protection. This protection is something you don’t get from with logbook loans, guarantor loans, bank overdrafts, or credit cards.

You’ll benefit from:

a capped interest rate – no more than 80p per £100 borrowed per day
capped late fees – no more than £15 if you miss a repayment
capped total repayment – you’ll pay no more in interest and fees than the amount of money you borrowed
capped payment collection attempts – no more than two attempts to collect a repayment
you may nominate a debt charity representative (at no cost) to act on your behalf if you fall behind on repayments

Which lenders like to work with the self-employed who have bad credit?

There are hundreds of lenders in the UK. A good number of them are happy to offer instalment loans for self-employed with bad credit. We can connect you to them – read on to find out how.

How much can you borrow on an instalment loan for self-employed with bad credit?

Instalment loans for self-employed with bad credit are usually for between £100 and £2,500.

Can you take out an instalment loan to fund your business?

No. You must use an instalment loan for self-employed with bad credit on household-related expenses. You shouldn’t use a loan to buy equipment or other goods and services for your business. You should approach your bank for help with that.

Should you use a broker or go direct for an instalment loan for self-employed with bad credit?

BestShortTermLoans doesn’t lend money to you. What we do is work with our panel of lenders to find a company happy to give you an instalment loan for self-employed with bad credit.

We’re a broker and not a lender. Lenders work with brokers like BestShortTermLoans because they trust us to make sure that we only present them with loan applications from people they want to work with. Remember the “borrower profile” we mentioned earlier? When you apply through us, we then match your details to the lender with the borrower profile closest to you and your current financial circumstances.

The whole process takes seconds – if you need money now, we’re able to work just as fast on your behalf as if you’d applied to a lender direct yourself.

We’ll gather up the quotes we get back from the panel of lenders and present you with the information you need to make a decision on the right loan for you. You’re under no obligation to take out any loan we find for you. We never charge for our service, regardless of whether you take out a loan we find for you or not.

To get started, please click here.