As our remote working career prosper, we might want high-ticket items that we can’t afford with one-time payments. A nice house, a decent car, or maybe that business venture you’ve always wanted.
But unfortunately, not everyone can buy a car or a house in cash. And for business, not everyone can finance 100% from their savings. That’s why we borrow from the bank to accommodate these purchases.
But then, banks are pretty strict when it comes to their loan approval. So how can a remote worker or freelancer get their loans approved? Worry not! Here are 6 tips to loan as a remote worker.
Register Your Practice
Banks need proof of your source of income. As remote workers, freelancers, or independent contractors, we don’t have an employer who registers us in their business. With this, we should register our own practice.
For registration, we are considered self-employed professionals. We need to have a BIR registration, an Occupational Tax Receipt (OTR), and sometimes a DTI registration. With this, you can prove where you get your finances.
Updated in Paying Your Taxes
Proving the source of income is different from proving that you have an income coming in. Now that you have your registrations. Now, you need to show that you have the capacity to pay the loan.
One proof you can show is your Income Tax Return. You should be updated in filing your income tax return. After all, if you have an income tax to pay, you should have the income to show it for.
Bank Statement for the Past 6 – 12 Months
How do you prove that you have cash flow? Every month, money is credited to your bank account from your clients. But the bank wouldn’t take your word for it. Your bank statement will.
A bank statement is a list of all transactions for a bank account for a certain period. And you can get this in your bank branch.
With a bank statement of around 6 to 12 months, you can show them that you are indeed liquid for the loan you’re applying for.
Evidence of Taxable Income
What if you don’t have an ITR and you don’t have a bank account? Can you still apply for a loan? The answer is yes.
(Although, please consider having a bank account. It would be easier if at least you have a bank account in the future. You can request a bank statement even with some online banks with high interest rates.)
You just have to show evidence of taxable income. For example, you can show your contract to your clients. If possible, you can also show a certificate of earnings.
In this way, you can affirm that you have enough cash flow for your loan.
Maintain a Good Credit Score
Now that you have established proof of cash flow. The bank will check your financial habits with your credit score. Do you pay on time? Or are you irresponsible with your deadlines?
A credit score is like a measure by financial institutions that rates your credit worthiness. A high credit score will allow you to borrow higher amounts. And sometimes, at preferential rates.
If you don’t have any financial records, you can use a credit card (maybe get a secured credit card first) and pay them on time.
By using your credit card, you can increase your credit score for your loan. Just make sure to follow these credit card tips.
Apply for a Loan on Your Bank Branch
Familiarity goes a long way. Where did you open your bank account? It might be best to apply for a loan from that branch directly.
They already know you. They have access to your bank records. You might even have years of history with them. So there are bigger chances that they will know your full capacity to pay. And grant you the loan you’ve always wanted.
Are you ready to purchase the house or car of your dreams? With a loan from a bank, you can surely pay them lightly on your terms. Cheers!