Are you unemployed and looking for a loan to get you over a rough financial patch? If so, you are probably struggling to find a lender? If so, you may wonder if it’s even possible to get a loan while unemployed. Well, we’ve got good news and bad news. The good news is, you don’t necessarily need a job to get approved for a loan. The bad news is, you will need to prove you can make regular payments to qualify for a loan. You can do this by showing alternative income, providing a valuable asset as security, or by asking someone to cosign a loan for you.
Read on to learn more, and to find some reputable lenders who offer loans to the unemployed.
Can I get a loan while I’m unemployed?
Yes, you may be able to get a loan while unemployed. However, you will have to prove that you have some type of income.
What kinds of income might you have while unemployed?
- Welfare payments.
- Unemployment payments.
- Self-employment income.
- Regular deposits from investments.
- Social security.
- Alimony payments.
To verify your income, lenders may ask for access to your bank account, or they might request recent bank statements. And if you don’t have any form of income, you’re not out of options. You can also use a valuable asset, like a car or a piece of jewelry, as collateral for a loan.
Here is a list of lenders that consider unemployed applicants.
However, your best option may be to find a cosigner. A cosigner is someone who meets the eligibility criteria of a lender and is willing to guarantee your loan. If you fail to make payments, the lender can then require the cosigner to pay the balance. More on the pros and cons of a cosigner below.
The best loan options for the unemployed
Not all lenders will approve borrowers with the above types of income, but some will! Here are four of your best bets:
1. Credit card cash advances
If you already have a credit card, the easiest (and cheapest) option may be to get a cash advance from the ATM. However, not all credit cards allow cash advances. To find out if yours does, check the terms and conditions of your credit card agreement.
If your card allows cash advances, find out how much you can withdraw, what fees they charge, and the annual percentage rate (APR) before going through with it. While easy and convenient, cash advances can be expensive. Unfortunately, qualifying for a credit card when you’re unemployed is extremely difficult. Here are some other options.
2. Car title loans
If you have a vehicle which you hold the title to, you may be able to get a loan for 25 to 50% of its value. But be wary! These loans often have high APRs and short repayment periods. This combination makes them hard to repay. And if you fail to repay the loan on time, you could lose your car.
3. Short-term loans
Short-term loan lenders (such as those that offer payday loans) are another option for the unemployed. These lenders often have lenient eligibility requirements, which may include unemployment income, welfare income, etc.
Like auto title loans, the terms of payday loans are often steep, with high costs and short repayment periods. But they may help in certain situations.
Which short-term lenders generally accept unemployment and welfare income?
You can try the following, but remember that like auto title loans and payday loans, these are last resort loans with very high interest rates.
4. Personal loans with a cosigner
As mentioned above, the best option — if you are unemployed — may be to get a friend or relative with good credit and a solid income to cosign a personal loan.
The downside is, you’ll need to find someone to cosign for you. And if you can’t repay the loan, your cosigner will be fully responsible. This can seriously strain a relationship, so be sure you can meet the repayment schedule before choosing this route.
How to prepare to get a loan while unemployed
If you’re unemployed and need a loan, you’ve already taken the first step: figuring out what loan options are available to you.
Next, you should get your financial profile in order. Figure out how much income you have, and which documents you’ll need to prove it.
Then, shop around. Check out what’s available from each of the different loan types, from credit cards and payday lenders to personal loans. Get quotes and compare the costs and benefits.
Lastly, of your available options, find the one that offers the most benefits and fewest drawbacks. Make an informed decision, and be sure that you understand all the details of your chosen loan.
Ready to get started?
SuperMoney can help you with your shopping process. We have in-depth reviews of personal credit cards, payday lenders, personal loans, and more. Read real reviews from past customers and get the quotes you need to find the perfect loan for your situation.
Jessica Walrack is a personal finance writer at SuperMoney, The Simple Dollar, Interest.com, Commonbond, Bankrate, NextAdvisor, Guardian, Personalloans.org and many others. She specializes in taking personal finance topics like loans, credit cards, and budgeting, and making them accessible and fun.