Can you Get a Cash Advance for Unemployment Benefits?
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Summary:
Unfortunately, you can’t get a cash advance for unemployment benefits from the state agency that provides your unemployment benefits. However, there are other ways to get a cash advance or other type of loan based at least partially on your income from unemployment. Payday loans, secured loans, or cash advances from credit cards are just a few of your options.
Unemployment benefits, sometimes known as unemployment insurance, are meant to help bridge the gap between losing one job and finding another. It works by providing unemployed workers with a percentage of their former wages. Sadly, this government assistance is very often not enough for families to continue to pay all of their bills without interruption.
For this reason, many people receiving unemployment benefits may find themselves looking into a cash advance loan, payday loan, or other short-term loans to help make ends meet while they search for a new job. Read on to learn more about cash advances, unemployment payday loans, and other lending options for unemployed borrowers.
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Can you get a cash advance for unemployment benefits?
It depends on what you mean by a cash advance. You can’t get your state agency to give you an advance on your unemployment benefits, but you may be able to qualify for a loan based on that income. However, your unemployment benefits may not be enough to qualify for a loan. If you do qualify for a loan, it will probably come with high interest rates and fees. This is because unemployment income is only temporary — usually 26 weeks — and most lenders want to see a steady stream of income.
Specific “steady income” requirements vary by lender, but anywhere from six months to two years is pretty standard. This, of course, depends on the loan type and if you’re applying for secured loans or unsecured loans. For example, mortgage loan lenders typically require at least two years of stable employment, whereas you may qualify with personal loan lenders if you’ve only had six months with your current employer.
But it’s important to remember that income is only one of the requirements needed to secure an emergency loan like a payday loan or similar. Other qualifications include:
- Having a valid bank account in good standing
- A good credit score
- Being a U.S. citizen with a Social Security number (usually)
- Being at least 18 years old
IMPORTANT! What constitutes a “good” score can vary by lenders online versus traditional financial institutions. And remember not to trust any lenders who claim to not require a credit score check.
Additional requirements
Other requirements may also affect loan approval. For example, if you’re looking into secured personal loans such as car title loans, the value of the collateral is also a deciding factor on if you can qualify for the loan and/or the total loan amount.
In addition to the factors mentioned above, you’ll need to provide your monthly income. However, this can include other sources aside from regular income or unemployment income, such as:
- Investment income from dividend payments or rental properties
- Social Security benefits
- Disability income
- Alimony
- Child support
The bottom line is that a cash advance or emergency loan for unemployed people can be tougher to qualify for, but there are several options who accept unemployment benefits as income. That said, be sure to sift through multiple loan offers carefully to get the best interest rates and loan terms possible under the circumstances.
If you’re looking for a personal loan specifically, consider the lenders below to get a better idea of what interest rates and terms you may receive.
Loans for the unemployed
If you’re unemployed and having trouble getting loans from traditional lenders, you do have other options. This includes online loans from direct lenders like payday loan lenders. However, you’ll still need to meet at least some requirements, like having an active checking account.
Secured loans for unemployed people
It can be tough to get unsecured loans when you’re between jobs, but some lenders will grant loan approval for personal loans that are secured by some type of collateral. For smaller items, like jewelry or electronics, you could get a pawn shop loan. For a larger loan (and better terms) you’ll need to put up something bigger like a car, boat, or another expensive item.
Mobile cash advance apps
Cash advance apps are one of the latest ways to get short-term loans for unemployed people. You’ll have to do your research since some of these apps require proof of steady income from a job in addition to an active checking account. But there are many lenders that will accept unemployment benefits as income.
It should be noted that the loan amount you can get from a cash app is typically pretty small at first (like $25 or $50), but that amount can increase as you prove your creditworthiness. The loans are also very short-term loans similar to payday loans.
To apply for the loan, first download the mobile app, fill out some type of short loan application, and link it to your account. If approved, the money will be deposited directly into your bank account. Then when the loan term is up (typically when you get your unemployment benefits deposited), the money you owe is automatically deducted from your account.
Payday loans
Payday lenders are another option to get some quick cash. Often it will only take a day or two to get money deposited directly into your bank account, especially with online lenders where you could have it in a matter of hours. There are some direct lenders who specifically work with payday loans for unemployed individuals or even bad credit loans.
But be careful. Interest rates are typically very high and there are often other fees as well. The real danger is if you aren’t able to pay the loan back on time. Late payment fees can be steep, and people who do start missing payments can quickly find themselves in an endless cycle of debt.
Also keep in mind that payday loan direct lenders often say: “no credit check,” or “bad credit, no problem,” but that’s not entirely true. They certainly have much looser requirements than traditional lenders, but they are, at a minimum, still going to do a soft credit check and verify your bank account information.
As long as you understand the terms before agreeing to the loan, a payday loan can be one option in an emergency. However, try to avoid getting a personal loan if at all possible. Take a look at the terms below to get a better idea of what you might qualify for.
Pro Tip
If you’re researching payday loans for unemployed people, car title loans for the unemployed, or similar such loans, carefully read the fine print of the loan agreement. Many of these so-called “predatory” payday lending practices may not explicitly disclose certain hidden fees or other terms that you’re not aware of upfront.
What if you can’t get loan approval at all?
In some cases, if you can’t get qualified for even specific loans for the unemployed — perhaps because of particularly bad credit or if your unemployment benefits have run out — you may need to consider some other possibilities.
Get a cosigner
You may need to change your strategy if you have very low income or bad credit. For example, you might want to ask a trusted friend or family member to cosign your loan application with you.
A cosigner acts as a guarantor for the loan, so if you don’t make your payments, that person is responsible for your loan. But, if you manage the loan process responsibly, this might be the best loan strategy to get the money you need and raise your credit scores at the same time. Compare the personal loans below to get started, all of which accept cosigners.
Get a credit card cash advance
Getting cash from your credit card should go on the list of last resort options along with most payday loans or car title loans for the unemployed. However, it is an option if need immediate financial assistance. Plus if you already have a card, there’s no credit check required, so it doesn’t matter if you have a bad credit history and a poor credit score.
Do keep in mind though that interest rates for cash advances from credit cards are even higher than normal rates for credit cards.
Pro Tip
Before you seek lending options, or accept a loan offer, be sure to look over your credit scores so you know where you stand. You can get a free copy of your credit report from each of three of the major credit bureaus every year from AnnualCreditReport.com.
Seek alternative income options
If you’re having trouble finding a job in your field, it might be necessary to look for alternative income opportunities. A part-time job, gig work, or freelance job are all options to make a little extra money to tide you over until you find full-time employment again. You may even find that you can turn a side gig into a full-time job and begin an entirely new career.
Another possibility to make some extra money is to sell off some things you don’t need anymore. You could set up an eBay, Etsy, or Amazon account, for instance, and use it to sell old books, electronics, tools, or other items that have just been laying around your house gathering dust. For a more in-depth look at possible side jobs, review and compare your options below.
Other types of financial assistance for unemployed people
In addition to seeking out different loan options to supplement your unemployment benefits, here are a few other ways to help you manage your monthly bills while you look for work.
Research government protections
If you’re having trouble with covering your bills and any of your debts are backed by the government, you may not be aware of certain protections you’re eligible for. For example, if you have an FHA mortgage or federally-backed student loans, you may be able to enter a forbearance or deferment period.
Either option basically means you can take a pause on those payments while you get back on your feet. Many consumers took advantage of these protections during the pandemic, allowing them to focus on other immediate expenses.
Prioritize your bills
A roof over your head, food, gas, electricity, and water are necessities no matter what your employment situation. But what about your other expenses? There might be a few bills you could minimize or even eliminate to make your monthly budget easier to manage. When life goes smoothly, we might not even realize some of the unnecessary expenses we carry around.
For example, are you still paying for cable? Maybe now is the time to break up with your cable company and just live with one or two quality streaming apps. How about your cell phone bills? Maybe a family plan can save you money every month.
And when was the last time you reassessed your car insurance? Insurance is important but if you’re driving around in a 12-year-old car with full coverage, you might want to reevaluate your policy. Get creative and you might come up with quite a few other ways to shave some dollars off your monthly bills.
Call your creditors
Credit card companies and other lenders aren’t required to help you out when you’re unemployed or otherwise having financial difficulties, but it’s never a bad idea to give them a call and let them know your situation. This is especially true if you’re in good standing with your creditors.
For example, you might be able to negotiate lower interest rates (at least temporarily), which will lower your monthly payments for the time being.
Seek local and state financial assistance
Organizations like the Office of Family Assistance and the National Low-Income Housing Coalition have programs that offer temporary financial assistance for rent, utilities, food, as well as other services.
Check with your local social services office for these options and more. If you’re a veteran, you can contact your local Veterans Affairs office to see if there are benefits that might be able to help you through this difficult time.
FAQs
Do credit card cash advances hurt your credit score?
If you use your credit card to withdraw cash, it won’t directly hurt your credit score because there is no credit check to get a cash advance. But remember that it can have an indirect impact on your credit history because it will raise your credit utilization ratio and increase your outstanding balances. However, for a relatively small amount of money, your credit scores shouldn’t be affected.
Can I borrow money from my personal bank or credit union if I’m unemployed?
If you receive unemployment benefits but still can’t make ends meet, it’s not a bad idea to make a trip to the bank or credit union where you hold your regular bank account or savings account to see if they can work with you. Because you already have a history with the financial institution, they might be able to provide financial assistance in the form of some type of unemployment emergency loan.
For instance, if you have savings that you don’t want to tap just yet, many credit unions will let you use that money as collateral for a small personal loan to tide you over. Similarly, if you have any certificates of deposit (CDs) that haven’t reached maturity yet (and you don’t want to cash them in early and incur early withdrawal penalties), an institution may also let you use that as collateral for secured personal loans.
Key Takeaways
- Finding a loan provider that will accept unemployment benefits for emergency loans can be tough, but there are options.
- Unemployed borrowers may be able to qualify for a fast loan if they apply for secured personal loans, payday loans, title loans, or mobile cash advance apps.
- Even so-called “bad credit” direct lenders will still usually check your credit report, payment history, bank account details, and income before releasing loan proceeds.
- Getting a co-signer on your loan application is an excellent way to get the loan amount you need and raise your credit scores in the process.
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