Personal Loans for Unemployed
Personal Loans may seem like it’s only extended to individuals with a regular paying job and not for those unemployed. But in times of financial hardship, those out of work will find that there are several options available to get the monetary aid they need. And in this article, you’ll learn what those options are, their specific requirements, and everything you should know before applying for one.
- APR range
- Max. Loan Amount
- Terms
- Minimum Credit Score
SoFi
- 5.99% - 18.28%
- $100,000
- 2 - 7 Years
- 680
NetCredit
- 30% - 180%
- $400
- 7 days up to 4 months
- None
Possible Finance
- 151% - 230%
- $2,000
- Maximum 2 months
- None
- APR range
- Fees
- Terms
- Amounth
- Unemployment protection
Bank 1
- 6.95%–35.89%
- Up to 5% transfer fee
- 3–5 years
- $1,000–$40,000
- No
Bank 2
- 6.95%–35.89%
- Up to 5% transfer fee
- 3–5 years
- $1,000–$40,000
- No
Bank 3
- 6.95%–35.89%
- Up to 5% transfer fee
- 3–5 years
- $1,000–$40,000
- No
Table of Contents
How do personal loans for unemployed work?
Qualifying for a personal loan if you’ve been recently laid off or are just not actively seeking work can be slightly more challenging than when you’re gainfully employed. And the reason for this can be boiled down to one factor: income.
The main thing that creditors look for when you take out a loan is your ability to pay it back, so if you don’t have a regular stream of income, it may be more difficult. But that is not to say that it’s remotely possible because employment is not the sole source of income, and other financial products may suit your present condition.
What you must keep in mind is that the credit products available to you may have terms that are not as lax, so it’s crucial to take a step back and contemplate if a personal loan is indeed what you need.
Requirements to qualify
Suppose you’ve decided that taking out a personal loan is the solution to satisfy your current financial situation. If that’s the case, this section will help you with some of the requirements you need to qualify for one.
As mentioned, most creditors will look for proof of income to approve your application. Again, this doesn’t have to be from a full-time job. Instead, what can constitute income can include pensions, annuities, social security payments, investments, dividends, alimony, and child support.
Some lenders may even let you apply using your spouse’s income if you’re married. This makes your spouse a co-applicant and gives you a better shot of gaining approval.
Of course, lenders would also need to take a look at your credit score, payment history, outstanding debts, and other factors that affect your ability to pay the loan.
Most creditors will look for proof of income to approve your application. Again, this doesn't have to be from a full-time job.
Social Security Benefit
Now, we touched on social security payments in the previous section as a valid source of income to apply for a personal loan. But did you know that it can also be an option if you’re dealing with an unexpected layoff? Like what happened to most Americans in 2020 due to the coronavirus pandemic, you may be able to claim Social Security if you too have lost your job.
But do remember that you should have reached the required number of credits (40) to be eligible and that claiming benefits ahead of your FRA or full retirement age (which, for 2021, is 66 and 10 months for those born in 1959) will effectively reduce the checks you’ll receive.
Aside from Social Security, you can also get another financial boost by filing for unemployment benefits at the same time. The good news is that this won’t affect your Social Security amount because unemployment benefits are not considered wages under the Social Security’s annual earnings limit.
What do you need to know about?
In applying for a personal loan with no job, you need to keep in mind a few crucial details about the credit product available to you. Reiterating what’s touched on earlier, income plays a huge factor in getting favorable terms. But without a job that pays a dependable income, creditors need to counterbalance their risk in letting you borrow their money.
As a result, it affects some of the aspects of a personal loan in different ways. Here are some of them:
- Interest Rate. The loan afforded to you may come with a higher interest rate because the lenders who offer them are not your typical high street lender. Creditors who extend credit to unemployed individuals specialize in a different category of personal loans. They mostly cater to low-income borrowers or those with bad credit, so they may not have the most favorable interest rates.
- Repayment Terms. While a repayment term for those with steady employment can average from 3 to 5 years and can also be as long as 12 years, the type of loan you can get, in this case, may not be more than a year. Usually, lenders would approve your application but would need you to pay it back in a few weeks to a few months.
- Guarantor. Sometimes lenders require a guarantor or a co-applicant in your application. This is one way for the lender to ensure that someone will assume the responsibility of repaying your loan if your situation doesn’t change immediately and you’re unable to make payments. But usually, lenders only ask for a guarantor if you are seeking a higher amount with better terms.
- Collateral. If you don’t know someone who can be your co-applicant, creditors may also accept some of your assets as collateral. The kind of acceptable collateral will largely depend on the loan type you’re applying for and the type of lender you are dealing with. But usually, the asset’s value should match or even exceed the exact amount you are borrowing for it to get approved.
How much can you borrow?
The exact amount you can borrow hinges on many factors, including your credit history, existing debt, other income sources, and loan type. Lenders look at all those factors to gauge their risk in lending you money and frame what loan terms and loan amount would be appropriate to your situation.
The common type of credit that is available to you may be limited to payday or emergency loans. With this, you’d be able to borrow anywhere from $50 to $1,000.
There’s also a chance that lenders may offer you a higher amount, but again, that depends on what other supporting details you add to your application (e.g., co-applicant, collateral).
SoFi, for instance, is an online personal finance company that can be more lenient to borrowers when it comes to income requirements. As long as you meet their set criteria, like an excellent credit score (700 and above), SoFi may let you borrow money from them.
SoFi advertises loan amounts of $5,000 up to $100,000.
The exact amount you can borrow depend on the lender you choose.
Grants for disabled people
Disabilities, whether temporary or permanent, are distressing situations. If it’s the cause for the lack of employment, do know that there are also a number of grants available for specific conditions.
Grants can provide you the funding you need to resolve your financial difficulties. The most common one available is the Social Security Disability Insurance (SSDI) program. This grant extends benefits to you, and even to some of your family members. But to qualify, you need to have worked long enough and paid Social Security taxes.
Other organizations also cater to specific needs and conditions with each of their own qualifying standards and funding limits. If you seek a grant for a particular disability, it’s best to contact the organization directly.
Financial alternatives
If none of the options stated above appeal to you, then you might find other options in the following financial alternatives below:
- Secured Loans. A secured type of loan is where you would have to put up collateral to get approved for the credit. The collateral can come in the form of your home, car, or any other asset you own. In fact, a pawn loan is also considered a secured loan, but the difference is you can use assets that other lenders wouldn’t normally accept as collateral like jewelry, firearms, or even electronic gadgets.
- Credit cards. If you already have an existing credit card, and you have a fair estimate for when things will turn up for you, then credit cards are one way to afford immediate needs. With this, you still have access to credit regardless of your employment situation. However, you need to have some certainty as to when you’re going to repay your credit card’s balance because interest fees and other fines can pile up quickly.
- Friends or Relatives. Finally, a rule of thumb before taking on any credit is to seek help from your friends or relatives first. Loans are a big commitment. If you’re unprepared for your loan’s additional costs, then it could spell a lot more trouble than swallowing your pride and letting people you know in on your current hurdle.
Frequently Asked Questions (FAQ)
While employment is a factor in getting approved for a personal loan, it doesn’t solely determine your eligibility. It mostly has to do with your income and if you currently receive a steady stream of it to accomplish payments.
When you get rejected after applying for a personal loan with no job, the best course of action is to reassess your situation and figure out what other options you have. You can always try and apply again, but it would be best to take some time to improve your present circumstances.
When you don’t have a job but need immediate cash to satisfy a financial need, you should have a secondary income source for creditors to consider your application.
Certain lenders don’t require income verification like Netcredit for their financial products, but that doesn’t mean that you can be approved for a loan without an income source.
Any answer you have on your application that doesn’t constitute the truth about yourself and your financial condition has repercussions and is considered fraud.
