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Guide to Personal Loans for Gig Workers

Guide to Personal Loans for Gig Workers
Austin Kilham
Austin KilhamUpdated February 24, 2023
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
The number of gig workers in the U.S. is growing. In a 2022 survey, 36% of employed respondents said they were gig or independent workers. While gig work can provide freedom from a traditional 9 to 5 job, it can also cause financial uncertainty. For instance, gig workers often need to provide and pay for their own equipment. And there may be times when they’re in between jobs and need a cash infusion to cover living expenses like rent and groceries. In such situations, gig workers may need to borrow money, and personal loans are one option they can turn to. Here’s a look at personal loans for gig workers. 

What Is a Gig Worker?

Gig workers are individuals who work as independent contractors and freelancers. They may work in a variety of areas, including food delivery, rideshare driving, content creation, computer programming, pet sitting, and construction. These workers are self-employed. They don’t typically have a steady salary or benefits like full-time workers do. For some, gig work is a way to be their own boss, take control of their workload, and manage work/life balance. But it may also mean less job and financial security. 

Can Gig Workers Get a Personal Loan?

When a gig worker doesn’t have money from a job coming in but they need cash for bills and expenses, a personal loan for gig workers could help tide them over. Loans for gig workers can help cover things like rent, medical bills, and living expenses. In other words, a personal loan could be like a cash advance for gig workers. Personal loans are installment loans offered by banks, credit unions, and online lenders. They provide a lump sum of money that a borrower agrees to pay back in regular monthly payments with interest. One of the benefits of personal loans is that they’re flexible. They can be used for virtually any purpose. They also offer a wide range of amounts to borrow. You can explore personal loan options to get the most beneficial rates and terms for your needs.

Getting a Loan for Gig Workers

If you’re thinking about applying for a personal loan, first familiarize yourself with the typical personal loan requirements to make sure you qualify.  

Loan Requirements

Your credit score is one of the main factors lenders consider when deciding whether to approve you for a personal loan. The higher your credit score, the lower the interest rate you’ll typically get. A lender will also look at your debt-to-income ratio (DTI), which compares your monthly debts to your gross monthly income. Typically, the lower your DTI, the better. Ideally, lenders like to see a DTI of less than 36%. Employment and income are other personal loan requirements. Gig workers may need to provide proof of their earnings. Pull together your tax returns, pay stubs, bank statements, or 1099s to help document what you earn. If it’s difficult for you to verify your income, you may be able to get personal loans with no income verification. However, these loans may have higher interest rates. And if you’re currently out of work, it may even be possible to get personal loans while unemployed.

Types of Personal Loans for Gig Workers

There are a number of different types of personal loans for gig workers in need of funds. Here are some different kinds to consider:

Secured Loans

Personal loans can be secured or unsecured. A secured loan requires collateral, such as a car or another asset, to back it. Secured loans typically have lower interest rates, but if you default on a secured loan, your lender can seize your collateral. 

Unsecured Loans

Most personal loans are unsecured, and don’t require collateral. However, unsecured loans may come with higher interest rates, and you might need a higher credit score to qualify for them.

Debt Consolidation Loans

With these personal loans, you borrow money to help pay off debt you owe. Rather than paying multiple bills, you consolidate them into one loan, simplifying payment.

Personal Line of Credit

With a personal line of credit, you can borrow up to an approved amount, which you then repay in monthly installments with interest. Typically, there is a draw period of a number of years when you can borrow money, followed by the repayment period. A personal line of credit generally has lower interest than credit cards.

Short-term Loans

If you don’t have great credit, you may be able to qualify for a short-term loan. They generally provide quick funding, but these loans typically have higher interest rates and short repayment periods of a year or less. Some examples of short-term loans are car title loans and payday loans.Recommended: What Are the Differences Between Payday Loans vs. Personal Loans?

Personal Loans With Lantern

Personal loans can be beneficial for gig workers in need of cash to pay their bills or cover expenses. Just be sure to have a plan for repaying the loan before you take it out.It’s a good idea to shop around for the best personal interest rates and terms you can get. Lantern can make the process more convenient for you. Just fill out one simple form, and in our online marketplace, you can get offers from multiple lenders all at once.

Frequently Asked Questions

Can gig workers get a personal loan?
What loans are available for gig workers?
How do gig workers prove income?
Photo credit: iStock/Youngoldman

About the Author

Austin Kilham

Austin Kilham

Austin Kilham is a writer and journalist based in Los Angeles. He focuses on personal finance, retirement, business, and health care with an eye toward helping others understand complex topics.
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