How Gig Worker Loans Work
June 28, 2022 | Mason Roberts
Pew Research stated that around 16% of Americans use gig work to make money. As a gig worker, you are a contractor who must file taxes as self-employed. It's this self-employed status that often makes it hard to find loans. But luckily, it isn't impossible.
There are lots of gig worker loans out there, and we'll discuss the top five here to ensure you know exactly how they work.
Are You A Gig Worker?
Just before we jump in, it's worth clarifying that you are actually a gig worker. While many self-employed positions fall under this category, the most common are as follows:
- Ridesharing drivers like Uber and Lyft
- Food delivery drivers for companies like InstaCart and GrubHub
- Contract delivery drivers for Amazon Flex
- In-person freelance services such as DJs and photographers
- App-based or digital freelance services like virtual assistants and graphic designers
Once you're sure you are a gig worker, it's time to discover how gig worker loans work.
5 Types Of Gig Worker Loans And How They Work
1. Personal Lines Of Credit
A personal line of credit is a predetermined amount of money that you can borrow over an agreed duration (known as the draw period). It's similar to a credit card in that you draw from the available balance and only repay the amount you use.
How Personal Lines Of Credit Work
You can access money from the available fund balance at any time throughout the draw period. It allows you to only borrow the exact amount you need.It's different from a term loan as you decide when to take advances; you don't receive a lump sum at the beginning of the agreement. Ultimately, this means you are charged interest from the get-go.
Speaking of interest, you only pay it on the amount you draw instead of the entire balance. You'll likely save a lot of money this way.
Finally, once you've repaid the amount drawn against your line of credit, the figure is available again. However, you only get this perk if you abide by the lender's terms.
2. Co-Signed Loans
A co-signed loan is a standard term loan that allows you to add a guarantor to improve your chances of more attractive interest rates. It's one of the best gig worker loans for those with low credit scores or limited income history.
How Co-Signed Loans Work
The co-signer is typically a family member or very close friend. Once signed, they take full responsibility to repay the loan if you cannot pay, which gives the lender additional assurance that they will get their money back.
Since the co-signer shoulders this responsibility, their credit score is harmed if you make late payments. Therefore, co-signed loans can put a strain on otherwise happy relationships.
3. Fixed-Rate Loans
With a fixed-rate loan, you don't have to deal with fluctuating interest rates. Instead, it stays the same throughout the loan's term.
However, it's important to keep an eye on your loan documents because sometimes, you're given a fixed-rate loan for only a portion of the term.
How Fixed-Rate Loans Work
These loans are attractive to borrowers who don't want to worry about changing interest rates. As a gig worker, it's beneficial for you because your income changes monthly. It allows you to avoid the risk of variable or floating interest rates that can change unexpectedly.
4. Payday Loans
Even if you don't have a very good credit score, you can get payday loans as a gig worker with Nevada Title and Payday Loans, Inc. It's a short-term financing option that lets you borrow up to $500 to tide you over between paychecks.
How Payday Loans Work
The short-term nature of the payday loan means your financial climate is only impacted for a short time. Typically, you have to pay it back at the end of the month.
It tends to be the obvious route for those with bad credit scores because you can gain approval with just the following:
- State-issued photo ID
- Blank check
- Most recent pay stub
5. Car Title Loans
Title loans are one of the easiest ways to get a loan as a gig worker. At Nevada Title and Payday Loans, Inc., you can borrow up to $15,000 to fund emergencies, depending on the value of your vehicle.
The in-person process takes just 30 minutes, and you'll receive the money you need on the same or following business day. Just follow the steps below:
How To Get Car Title Loans
- Complete the form.
- Wait for one of our loan associates to call.
- Bring your driver's license, vehicle, and clear car title to your local store.
- Wait while a loan representative examines your information and assesses your vehicle to decide whether you qualify for the loan.
- If you're approved, finish the paperwork.
- Finally, get the money.
Submit Your Application For Car Title Loans Today!
If you need gig worker loans today, submit your title loan inquiry with us right now.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.