Can you get a Payday Loan if you Work Freelance?

Published: 03rd June 2011
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If you are a freelancer and have looked into the possibility of getting a payday loan, then you may have found that information is either difficult to find or is contradictory. Unfortunately there isn't a single rule for those who work on a freelance basis, or indeed who are self employed generally. However, it is likely that most lenders will immediately discount you on circumstances alone.

The unfortunate truth is that the self employed and freelancers simply provide a far greater risk than those who are in regular employment with a guaranteed wage at the end of the month. Whilst you might routinely take home significant amounts of money, this will provide small comfort for the lenders.

As mentioned, it is the guarantee of a borrower having funds added to their account month after month that payday loan providers are seeking. Even if the annual take-home salary is significantly lower than a freelance operative, it is at least assured. It sounds like slightly twisted logic, but as with any lending, they have to weigh up risk and the likelihood of a borrower's ability to repay.

The good news though is that not all payday loan companies employ such strict rules. Some will be happy to accept freelancers, although it may be with the provision that you have a guarantor on the account. Again, this isn't strictly a universal rule, but there should certainly be provisions available to you in almost any circumstances. For instance, in specialist circumstances, even those who are unemployed can get a payday loan.

Of course you need to be a little bit careful when borrowing. As we've covered, the reason why most lenders are a little wary when it comes to lending to a freelancer is that jobs are gained on a contractual basis. So if you have a steady stream of work and are sure that you can repay, then it is safe to do so and you can apply with confidence.

However, if there is any doubt in your mind about the ability to access the necessary funds on the allocated date, then you should seriously reconsider your options. Remember that it isn't just the loan amount that you'll need to pay off in one go, it is also the interest and any other additional charges levied by the lender.

Failure to meet with the deadline will see you charged a pre-defined fee. This will also have an adverse affect on your credit rating, which could make getting loans and other finance even more challenging in the future. A payday loan will usually be rolled over, which means you'll get another month to pay it - as well as another month of interest to pay. This can be hugely expensive and may leave some borrowers in severe financial issues, particularly if they constantly need to rollover their payments month after month.

Whilst this cautionary tale isn't relevant to most borrowers, it is an unfortunate and sometimes inevitable consequence of borrowing without proper planning. Whilst the payday loan companies employ far more open application processes, enabling more people to receive finance, most are still dedicated to responsible lending - therefore won't lend to those who are considered high risk or cannot prove their income. Unfortunately, in some instances, this means that freelancers can bear the brunt.

So if you are self employed and/or are a freelancer by profession, obtaining a payday loan may well be possible; however it is likely to be far more challenging than if you receive a regular wage. However, if you are prepared to do a little investigative work yourself and perhaps find someone willing to be a guarantor, there should be some options available to you.

Vincent Rogers is a finance writer who writes for a number of UK businesses. For short term payday loans, he recommends Paydaypower.co.uk

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