When it comes to availing a personal loan, both self-employed individuals and salaried professionals have access to financing options. However, the personal loan eligibility criteria for each are quite different. These differences arise because of the nature of income, financial stability, and documentation requirements. If you’re planning to apply for a personal loan, understanding these key points can help you prepare better.

Here are six important differences between self-employed and salaried individuals when it comes to personal loan eligibility:

1. Income Source and Stability

One of the biggest factors lenders consider is income stability.

Salaried: For salaried individuals, income is regular and predictable. They usually receive a fixed salary every month, making it easier for lenders to trust their repayment ability.
Self-Employed: Income for self-employed professionals can vary from month to month. Lenders evaluate average income over a longer duration to assess stability. This makes the process slightly stricter for them.
2. Proof of Income

Both groups need to prove their earnings, but the documents differ.

Salaried: Generally, the latest salary slips, Form 16, and bank statements are sufficient.
Self-Employed: They need to show ITR (Income Tax Returns) of the past 2-3 years, business proof, balance sheets, and profit & loss statements. This can make their personal loan eligibility harder to prove.