As more than one person has complained, the bank will only lend money to people who can prove they don’t need it. From their perspective, this makes sense: a borrower who can’t repay the loan is a massive loss for them.
If you’re stuck without a source of income, however, you’re probably not full of sympathy for them: emergencies happen when they want to, often making it necessary to borrow some money. Is it possible to get a loan without a job? Do other sources of income count when getting a loan? How does your credit history figure into all this? How can you improve the chances of your loan application getting approved if you don’t have a job?
The good news is that it’s indeed possible to get a loan while unemployed. The bad news is that you’ll have fewer good options without a source of income – in particular, instant loans for unemployed people carry high-interest rates.
Where can You Find a Loan for Unemployed Individuals?
Even if you don’t have a job, you can still approach banks as well as less traditional credit companies about getting a loan. Being approved without a job is far from guaranteed, though. If you’re looking for an unsecured personal loan rather than putting up collateral such as your car, you can assume that your credit report will be scrutinized very carefully. A long track record of using credit responsibly will help a lot.
For the most part, at least when talking to a bank, you will still have to show that you have one or more sources of income, even if you don’t have a job. Some examples of these include Social Security payments, child support, and – at least for small, short-term loans – unemployment benefits. Different financial institutions have other policies on what types of personal income they’ll consider when you’re applying for a loan without a job, so be sure to compare several options.
If you lost your job unexpectedly, you might still receive a regular income from investments. This is probably the easiest way to get a loan for the unemployed who have some assets and probably a pretty good credit score, even if they need a personal loan to tide them over temporarily. Should they be unable to repay the loan using this income, they can at least clear it by selling stocks, property, or some other investment, thereby avoiding harm to their credit report.
What Other Factors Could Help with Your Loan Application?
Even if you don’t have a job right now, you’re probably hard at work scouting out new opportunities. Credit scores may be less critical to the bank if you can prove that you’re actively job-hunting and getting interviews, especially if you can show them a tentative offer. Income from a business or side hustle is a little more difficult for the bank to evaluate, but it is still worth mentioning, especially if you can show regular earnings for the past several months.
You can also consider finding someone with a better credit score to co-sign the loan. This makes it possible for almost anyone to get a personal loan while they don’t have a job, but it isn’t something you should do on a whim. Co-signing means that they’re on the hook for all repayments if you fail to make them, meaning that they’re placing their credit history on the line to help you.
Can I Get a Personal Loan with No Bank Account?
Even if you don’t have a job, getting credit is much more comfortable with a bank account. The reason for this is as follows: bank accounts help to build credit scores, as well as giving you an existing relationship with a bank that may offer personal loans. It also serves as a dependable proof of your address and identity: if a lender knows where you can be reached, they’ll feel more secure about giving you a loan without a job.
If you can’t open an account, you still have some avenues open to you. Many lenders, especially online, cater specifically to people in unusual circumstances. Some, for instance, are willing to forego a credit check as long as you have proof of income. There is a catch, unfortunately: people without bank accounts are more significant credit risks, statistically speaking. This means that lenders willing to service them typically charge high-interest rates, which makes missed payments or default more likely. Both of these will harm your credit score.
If you have an asset to use as collateral, you can also look into non-bank, secured types of credit like a car title loan, and even pawning something you don’t need. These are expensive forms of credit; if you meet the requirements, you’re far better off joining a traditional lender such as a bank or credit union even if you don’t currently have a source of income.
Alternative Ways to Get a Loan While Unemployed
If you have a credit card, you can request a cash advance as an emergency measure. You’ll want to be very careful with this, though: the interest you have to pay can pile up very quickly if you don’t have an income to keep up with the payments. Alternatively, you can approach someone who knows and trusts you for a temporary loan.
Can’t think of anyone who’d be willing? You can also turn to the internet for something very similar. With peer-to-peer lending, a low credit score is not always a dealbreaker, and you may not have to pay interest at all. You guarantee that you’ll pay back the stranger who lends you some money, typically $100 to $500. If you’re scrambling to find a source of income, this may be enough to get you in business for yourself.
If you’re willing to make a significant change and pursue a new career, or up-skill yourself to improve your chances on the job market, you can also try applying for a student loan. These typically allow you to use part of the money for living expenses, though you’re restricted in terms of what else you can spend it on. Depending on where you live and what kind of higher education you want to pursue, you may also be able to call on Uncle Sam. Both the federal and state governments provide grants and loans for retraining workers who have lost their jobs. Especially with unemployment figures being what they are right now, it’s unlikely that these will cover your entire tuition, but could help improve your long-term prospects if you have some money saved up.
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Right now, as many as 30 million Americans are unemployed, many of them through no fault of their own. While there are no easy answers to the dilemma facing them, they don’t need to suffer: there are some emergency loans they can use to tide themselves over.
It’s essential, however, not to bite off more than you can chew. Make sure to shop around for the best deal – there are online tools that make this easy. Keep an eye on interest rates, but more importantly, borrow only the smallest amount that will allow you to get by. Once you realize how many lenders are willing to work with you even if you don’t have a job, applying for a considerable amount may be tempting. Keep in mind that you don’t know how long unemployment may last – taking on a lot of debt without an income can turn out to be a trap.
