The Advantages of Stated Income Loans
If you’ve ever applied for a loan, you know just how much legwork goes into it. From pulling together your financial statements and tax returns to pulling together all the information you need for the application, the process is often lengthy. However, you do have another option. You can apply for a stated income loan.
These types of loans offer several advantages over more traditional options.
The Application Process Is Faster
When you need capital quickly, a traditional loan is often not the way to go. The process can take weeks or even months to be approved and for you to receive funding. States income financing does not require as much paperwork or as many financial verifications, which means the lender doesn’t need to take as long to look over your application. The faster review time often means you receive an approval more quickly and get your financing much sooner.
You Can Apply for One if You’re Self-Employed
Self-employment has many freedoms, but receiving financing is usually not one of them. A stated income loan changes that for many entrepreneurs, though. A traditional lender requires people to provide documentation of a regular income, which isn’t always possible for someone who is self-employed. A stated income loan is an easier and more commonly approved way for someone who works for himself or herself to get the money required to do everything from run a business to purchase a home.
You Decide What To Do With the Money
One of the biggest reasons people want to avoid traditional lenders is that big banks want to dictate how the borrower spends the money. In addition to using complicated math to determine exactly how much you can borrow in the first place, some lenders even require you to use the money you receive for specific things, such as making a certain business purchase. When you apply for a loan using stated income, you get to make all the big decisions. The lender will simply tell you how much your monthly payment will be, and you get to decide if you can afford it. Should you take on the loan, you can spend the money in any way that you see fit.
Of course, just like any other type of financing, a stated income loan is not perfect. Keep in mind that your lack of providing financial documents means you’ll pay a higher interest rate since you’re a bigger risk to the lender. However, if you need a loan quickly and don’t have a strong set of documents to back you up, this type of loan may be the answer to your problems.