Is It Possible to Get Unemployment Benefits Loans?


Obtaining loans while on unemployment benefits is possible, as unemployment benefits are considered income. Most lenders consider benefits, such as unemployment and Social Security, income. It’s also possible to get a personal loan should your unemployment benefits run out and you aren’t receiving any regular income. However, this will often come with a sky-high interest rate and should typically be avoided.

Unemployment is a natural phenomenon that occurs during the ebbs and flows of the business cycle, which is also called “cyclical unemployment.” With this in mind, it makes sense that most nations have an insurance policy to provide income for those that are laid off or become unemployed. In the United States, this is called “unemployment benefits.”

But for some, unemployment benefits aren’t enough to get by. What happens in this case? Can you get a loan if your only income is through unemployment? In this article, we’ll take a closer look at how to get a loan while on unemployment, what loans you may qualify for, and what to do if you’re cut off from unemployment.

What lenders want to see

Regardless of your employment situation, every money lender will look for three things when examining your risk profile: credit, regular income, and assets.


Regardless of whether you’re collecting unemployment benefits, a lender will look at your credit as standard procedure, especially when looking at issuing unsecured loans. Your credit report, along with your credit score, will be studied to analyze your risk with a hard or soft credit pull. Bad credit can substantially affect your ability to get a loan and the interest rates you may qualify for.

IMPORTANT! Again, although your credit score will have an impact on any loan you apply for, unsecured loans rely on your credit more than other loans. This is because unsecured loans are only “secured” by your credit trustworthiness rather than property, a car, or another asset.


Having assets that are worth value and can be securitized allows a lender to hedge the risk of the loan. If you do not pay them back, they have the right to an asset, such as a house (mortgage) or a car (auto loan). Other assets to consider are things such as a retirement account or even a rare wine collection.

That said, make sure you understand the risks that may come with missing loan payments. In the case of a mortgage or auto loan, this may mean losing either asset.

Regular income

Any time a lender issues credit, their main prerogative is to make sure that a loan issued gets paid back and gets paid back on time. Most lenders will offer credit on a loan that’s backed by an asset such as a house or a car.

However, the second thing that a lender will want to see is regular income. After all, without a regular income, how can the lender expect you to repay the loan?

Unemployment benefits are regular income

Unemployment benefits count as regular income. While this can be helpful when you want to apply for a loan, this also means you’ll have to pay taxes on this income, just as if you were actually working.

In addition to unemployment benefits, a lender may consider the below as sources of income (outside of a regular salary):

  • Unemployment benefits
  • Child support
  • Disability payments
  • Investments such as annuities
  • Pension
  • Social Security
  • Rental income
  • Inheritance
  • Alimony
  • Regular payments from a settlement

As you can see, it is absolutely possible to get a loan while receiving unemployment benefits. However, the interest rate on a personal loan, for example, will be higher if your sole income is unemployment benefits instead of a regular salary.

Pro Tip

It’s important to note that you need to report all other income, including side jobs, to your unemployment officer. This is because unemployment benefits are typically calculated based on a person’s total income or lack thereof.

Therefore, if you get a side gig like driving an Uber to qualify for a loan while unemployed, be sure to report it. It’s better to request financial assistance from friends and family than get caught defrauding the government.

Types of loans with unemployment benefits

Fortunately, people on unemployment benefits can receive multiple types of loans, which means the loan proceeds can be used for many different things.

Personal loan

You can apply for a personal loan through any major lender, such as a bank, credit union, or alternative lender. The loan will most likely be for a higher interest rate than the standard if your sole income is unemployment benefits.

That said, as long as you budget your funds properly, a personal loan could be helpful. To see what rates you may qualify for, take a look at some of the loans below, all of which are for unemployed individuals.


Yes, you can still get a mortgage even if your sole income is unemployment benefits. Of course, the other requirements for getting a mortgage will depend on the mortgage lender you reach out to. For instance, some may request proof of income for the past two or three years, which can include unemployment benefits. If you’re a seasonal employee, you may need to provide evidence that you’ll be rehired in the future.

Because loan application requirements will vary, make sure you compare your available options before signing the dotted line. You can use the comparison tool below to get started.

Auto loan

Although it’s difficult to get an auto loan on unemployment benefits, it’s possible. If you provide good credit and any additional source of income, it is doable. However, expect the interest rate to be significantly higher than a standard auto loan.

As with the other loan types above, be sure to compare loan terms and offers from multiple lenders before making a final decision. You can start this process using the comparison tool below.

Loans after getting cut off from unemployment benefits

If you get cut off from unemployment, your access to capital and debt is not completely dead. You can still borrow money in the form of a personal loan or emergency loan at a high-interest rate.

That said, these loans aren’t usually offered by your standard banks and credit unions. Instead, you may have a better chance of finding these loans through third-party alternative lenders, who are often the same lenders that offer payday loans. These lenders will look at the following things when deciding if to grant you a personal loan without an income source.

  • Government ID
  • Place of residency
  • Assets/liabilities (debt-to-income ratio)

In most cases, these types of personal loans are not difficult to obtain as long as you’re an American resident and not completely destitute. However, they are seen by lenders as high-risk and thus come with extremely high-interest rates. Ideally, these loans should be avoided at all costs.

Alternatives to personal loans

If you just got cut off from unemployment, you should really try and avoid predatory-looking payday or personal loans. Instead, you may want to consider these alternative approaches.

Credit cards

If you have access to credit cards with low or mild interest rates, this can be a great alternative to taking out a personal loan with no income. One of the big advantages credit cards offer is a lower monthly payment than you would pay with a high-interest personal loan.

Nevertheless, credit cards still come with higher interest rates than most loans. With this in mind, make sure you compare credit card interest rates before applying for one.

Dip into the “untouchable” accounts

If you have accounts set up for retirement, such as a 401(k) or IRA, consider dipping into those, even if you have to pay the penalty. The cash in hand with penalty is much preferable to an ever-spiraling compound interest rate, in which you eventually owe way more in interest than your initial loan was for.

Put the state “safety net” to work

There are various federal programs available to help those in financial need. These can help you avoid taking out a costly personal loan if you run out of unemployment benefits.

Most people have heard of various food stamps programs that are offered throughout the U.S. There are some less well-known ones, however, such as the Emergency Rental Assistance Program or the Supplemental Nutrition Assistance Program. You paid taxes for a reason, and these government benefit programs should be taken advantage of if you qualify.


Do banks give loans to unemployed people?

Yes, you can still receive bank loans if you are on unemployment benefits. However, the interest rates will be considerably higher. A bank or credit union might even be willing to lend you money with no income whatsoever, depending on your profile. This, however, is exceedingly rare.

Can I get a loan with no income?

Yes, you can get a loan with no income. However, it’s difficult to get from a financial institution and will probably come as a cash advance from a payday lender.

As long as you have decent credit and the requisite documents, you can get the loan approval pretty quickly. That said, cash advances can result in incredibly high interest rates that should be avoided if possible.

What is the easiest loan to get approved for?

The stronger your supporting documentation is, the easier it will be to get loan approval. For instance, a person with great credit and income might be approved for a mortgage quickly for an expensive house. A person applying for a no-credit-check payday loan with no documentation whatsoever might take longer to process.

Remember, in regard to the term “easiness” as it refers to “loan worthiness,” these no-credit-check payday-style personal loans are not difficult to get. However, they come with the caveat of very high interest rates.

Key Takeaways

  • Obtaining loans while on unemployment benefits is possible since these benefits are considered income.
  • Loans like mortgages, auto loans, and personal loans can all be obtained by people on unemployment benefits. However, the interest rate may be higher than a standard loan.
  • For those cut off from unemployment, taking out a personal loan is also possible.
  • Personal loans from payday lenders with sky-high interest rates should not be used to compensate for a lack of income.
View Article Sources
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  15. Best Personal Loans for the Unemployed — SuperMoney