04 April, 2025 | 14:27 IST
As freelancing and gig work gain popularity in India, many professionals are moving away from traditional salaried jobs. Gig work refers to short-term, flexible jobs where individuals are hired on a project or task basis instead of full-time employment. This includes freelance writing, ride-sharing, food delivery, graphic design and online tutoring.
While this shift offers greater flexibility and independence, it also comes with challenges – one of the biggest being difficulty in securing personal loans.
Banks always prefer giving loans to individuals with stable incomes to ensure timely repayments without defaults. Since freelancers and gig workers do not have fixed incomes, it makes it difficult for them to grab a loan. While the process may be difficult, it is not impossible.
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Yes, freelancers and gig workers can get a personal loan in India, but the process differs from that of salaried professionals. Unlike home or car loans, personal loans are approved based on the borrower’s income stability and creditworthiness.
When it comes to personal loans, salaried professionals have an advantage because they have a stable income and bank statements to prove their monthly fixed earnings. In contrast, freelancers and gig workers have fluctuating incomes which makes it challenging for banks to assess their creditworthiness.
The only way lenders can get assurance of borrowers' financial capability is by going through alternative methods such as income tax returns, bank statements and credit scores. The higher the credit score, the higher the chances of getting loans.
Many banks and non-banking financial companies (NBFCs) are providing personal loans to self-employed individuals and freelancers. Some fintech companies also offer gig workers customised loans based on their digital financial data.
Moneycontrol has partnered with seven lenders to provide you with quick, 100% digital loans up to Rs 50 lakhs. You can get the loan in three steps: enter your information, complete the KYC process, and set up an EMI term. Depending on your work status, interest rates can start as low as 10.5% per annum.
Every financial institution and fintech company has their own criteria set for offering personal loans to freelancers and gig workers. Here are some general requirements:
1. The age limit of the applicant must be between 21 and 60 years.
2. Most banks require freelancers to have a minimum monthly income of Rs 25,000 to Rs 30,000. NBFCs and digital lending platforms may have more flexible income criteria.
3. Since freelancers don’t have salary slips, banks assess their income stability by reviewing income tax returns from the past two to three years. Some lenders also consider digital invoices and bank statements from the last six to twelve months as proof of income.
4. The likelihood of loan approval rises with a CIBIL score of 700 or higher. A freelancer may need to apply with a guarantor or provide additional proof of income if their credit score is lower.
5. A freelancer may need to have at least two years of experience in their field in order to be eligible for some loans.
6. Lenders also look into the applicant's past debts and loans. Loan eligibility is increased when the debt-to-income ratio (DTI) is decreased.
Freelancers and gig workers are seen as higher-risk borrowers due to their irregular income, lack of salary slips and job uncertainty. To assess their creditworthiness, banks examine their income history through bank statements and income tax returns.
Unlike salaried professionals, freelancers and gig workers are offered loans at higher interest rates, typically ranging from 12% to 30% per annum.
Banks also demand extensive income proof, including multiple years of ITR, bank statements and client invoices. In addition to this, the approved loan amount for freelancers is usually lower than what salaried professionals with similar earnings might get.
Getting a personal loan as a freelancer in India is challenging but possible. A stable bank balance, regular tax filings and a good credit score can improve approval chances. As the gig economy grows, lenders are offering more flexible options with simpler documentation.
Moneycontrol has teamed up with eight lenders to offer fast, fully digital loans up to Rs 50 lakhs. The application process is easy to follow: enter your details, complete the KYC verification, and choose an EMI plan. Interest rates can start as low as 10.5% per year.
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