How to Get a Loan When You’re Unemployed

How to Get a Loan When You’re Unemployed: Can you get a loan without having a job? The fact that the title of this article portrays a method shows the possibility.

Of course, you can get a loan without having a stable job, but there is more to this. Get full information by reading this whole article.

How to Get a Loan When You’re Unemployed
How to Get a Loan When You’re Unemployed

How to Get a Loan When You’re Unemployed

The answer to this question is obvious. Of course, you can get a loan without having a job but you will need very solid credit and another source of income.

Lenders are more concerned about your ability to pay back your loans, which is why stable employment is a factor here. You will have to assure them you can make regular payments even if you do not have a regular job.

Factors that Determine Your Ability to Take Loans

The following are the most important factors considered by lenders before offering anyone a loan.

Credit History

If you want to get loans from lenders, you will have to show that you can handle loans responsibly by having a history of more timely than late payments. Most lenders also prefer credit reports without any blemishes like bankruptcies or foreclosures.

Credit Score

This is a very important factor. Lenders reserve their best loans (loans with lower interest rates) for customers with a higher credit score. Credit scores are calculated from your credit history.

Therefore, if you have a very positive credit history of timely payments, you will most likely have a very positive credit score and vice versa.

Regular Income

This is one of the most important factors that lenders consider. You do not necessarily need to have a regular job, you just have to be able to pay your bills. You need enough monthly income to cater to your living costs and pay your debts at the same time.

When you can show that you have such, you will most likely be granted loans.

These are the major factors that lenders consider before granting loans.

Alternate Income

If you do not have proper employment and thus cannot provide proof of employment, your lender will have to go through your financial records to verify other sources of income.

Although unemployment benefits can represent a portion of your income, they cannot be relied on because of their temporary nature.

other forms of income that can be accepted by lenders are;

  • Social Security benefit payments
  • Pension funds or other retirement benefit payments
  • Disability Income
  • Alimony or child support
  • Government annuity payments
  • Regular proceeds from a trust
  • Recurring interest or dividend payments
  • Veterans Affairs benefits
  • Public assistance
  • Income from your spouse or partner.

Also, you can qualify for a loan if you can show your lender that you have a significant supply of cash whether now or later. Here are a few situations your lender could accept

  • A contract for freelance work or a pending employment letter
  • A pending sale of real estate securities or other investment properties
  • Upcoming inheritance

What to Consider Before Taking a Loan When you are Unemployed

Taking loans during unemployment could be very risky. Therefore, you have to be very honest with yourself so that you can repay the loan as soon as possible.

This is because missing just one payment could hurt your credit history.

You have to be realistic about your ability to lay back your loan. If you are not convinced you could pay back your loan, you could skip the loan or go for a smaller loan amount.

Depending on the volume of your income sources, lenders may take certain actions as a caution because of your unemployment such as;

  • Lowering your eligible loan amounts
  • Expecting full repayment for your loan in shorter periods than normal
  • They might charge high-interest rates or origination fees in case you default on your loan
  • They may also compulsorily require payments by automatic debit from your bank account to reduce your chances of missing payments.

Where You Can Get Loans When You Are Unemployed

There are several places you can get loans when you are unemployed. You can get loans from banks, credit unions, and online lenders.

Although income source is one of the most important factors that lenders consider, some lenders offer secured loans. With secured loans, you can put up collateral just in case you default.

One good step you could take when looking for a loan is to shop around and compare lenders to see which of them are most likely to grant you loans with the best interest rate.

Should You Apply for a Payday Loan When you Are Unemployed?

It is quite tempting to go for a payday loan because they fund fast and offer loans without doing proper credit checks. However, these loans have very high-interest rates and repayment fees for unreasonably short periods.

These types of loans are more likely to trap you in a cycle of debt.

How to Get a Loan When You Are Unemployed

you can get a loan even if you are unemployed. Here’s how;

Determine How Much You Need To Borrow

knowing how much you should borrow is one very important factor to consider.

Go for loan amounts that fit in your budget even with the interest rates. This way, you won’t get in trouble quickly.

Check Your Credit

It is very important to know your credit score so that you can only apply for loans you qualify for without very high interest.

You can request for a free copy of your credit report from the three main credit bureaus.

Some lenders disclose their credit requirements upfront before accepting loan applications.

Compare Lenders

It is very important to consider various lending options before applying for any loan. Some of the factors to compare here are interest rates, loan terms, and the amount you can borrow. This is a very good opportunity to compare loan eligibility criteria.

Apply Properly for the Loan

Most lenders offer stress-free processes for loan application. You may need a few documents such as;

  • Government-issued documents such as a driver’s license or passport
  • Social security number
  • Proof of income

Once your application is submitted, lenders will look at your credit history and determine whether you qualify for a loan.

If you qualify for a loan, the fund will be disbursed to your account within a few business days.

How to Increase your Chances of Getting a Loan When you Are Unemployed

Since the fact that you do not have a job is a turn-off for most lenders, it is advisable to take some measures to increase your chances of getting employed;

Add a Co-signer

Applying with a co-signer having a very encouraging credit history and steady income could boost your chances of getting a loan.

The co-signer will be assuming the responsibility of paying back your loan if you are not able to pay it back, therefore, it is important to let them know about their role.

Apply for a Small Amount

Applying for a small amount could increase your chances of getting a loan. This will assure your lenders that you will most likely pay back your loan.

Apply for Secured Personal Loans

Providing an asset as collateral for your loan reduces the risk factor for taking the loan. Therefore, it gives you a higher chance of getting your loan approved. It is important to have proper thought before applying for this type of loan because you may lose your collateral if you default.

Frequently Asked Questions

How do you Get Loans Without a Job?

To get a loan without a job, you will have to prove to your lender that you can pay back your loan. To do this, you must present an alternate source of income or potentially available cash.

Do you need a Job to Get a Loan?

Of course, you need a Job to apply for a loan, but it is not compulsory. If you are unemployed, you can get a loan from lenders when you prove you can make stable monthly payments without defaulting.

Should I Get a Personal Loan While Unemployed?

Yes, you can, as long as you can pay back your loan, you can take personal loans.

How Important is My Credit History?

Your credit history is one of the most important factors lenders consider before giving you a loan. If you have a very good credit history, you have a higher chance of getting a loan.

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