It could be difficult to prove your income if you are self-employed or working for a part time job and your income is one of the most important factors that lenders look into when applying for a loan. This is where no doc loans could be very useful. For people who don’t have a stable monthly income or for those who simply don’t want to reveal their personal finances to lenders, this kind of loan may be just what they need.
Aside from not requiring a lot of documents, another advantage of self employed loans is its fast loan approval time. Your loan could be approved faster because only a simple verification and review process is needed provided that you also meet all of their other requirements.
You can also get approved of the loan easily if you have good credit. These lenders would still be willing to lend you money even without verifying your income as they will consider your good credit as proof that you can afford to repay the loan. There would be less risk of defaulting on the loan if you have good credit. And of course, people with good credit can get a better rate than those with bad credit. For this reason, you may want to check your credit report first before you apply for the loan. You also have to make sure that your credit report is updated and check whether there are some errors that could have affected your credit score. This is done in order for you to make sure that you are getting the interest rate that you deserve.
Considering the risks involved with not requiring some proof of income or employment, these lenders that offer no doc loans would most likely charge high interest rates. That is why you should not just apply for this loan just because not providing the documents needed would be convenient for you. Think carefully if keeping your finances private is really worth the cost. You also have to do your research in order for you determine if this kind of loan would be ideal for you or not.