Can I get a personal loan if I am unemployed?
Image source: Getty Images
If you need cash in an emergency and don’t have a house to borrow, you may be tempted to take your expenses off a credit card and end the day. But maybe there is a better solution: a private loan.
With a personal loan, you borrow a lump sum that you can use for any purpose. Personal loans have a fixed interest rate so your payments are predictable. And you could have that money in your bank account within days of applying. Also, a personal loan is not a secured loan, so it doesn’t have to be tied to a specific asset like a car loan. And in some cases, you can even qualify for a personal loan if you have one bad credit.
However, there are certain criteria that your lender will consider in deciding whether you are a good candidate for a personal loan. Specifically, lenders consider:
- What you credit-worthiness looks like
- Whether you have a source of income that will enable you to repay your loan
If you are currently unemployed, you may be wondering: Can I get a personal loan if I am unemployed? And the answer is: maybe.
Take out credit with a personal loan if you are unemployed
A solid credit history is not enough for a lender to feel safe lending you money. You need to demonstrate that you have the funds to keep up with your loan payments and, in general, a job is the best way to do it.
But that doesn’t mean that if you are unemployed you will run out of options. While it is true that you must provide proof of income to your lender, it can come from a variety of sources. These include:
- Social security benefits
- Disability insurance
- Maintenance or child benefit payments
- Interest or dividend income from investments
- social care
- Rental income from a property that you own
Let’s say you’re unemployed and need cash fast, but you also own a rental apartment with an active rent of $ 800 per month. If so, a lender should be willing to count that $ 800 as income, even if it isn’t from an employer.
What if you have no income at all? Well, maybe you are unlucky. However, if you have a signed letter of offer from a new employer but haven’t started your new job yet, a lender may be willing to loan you money.
Get a Corona hardship loan
It may now be possible to qualify for a humble one Coronavirus hardship loan if your finances have been hit by the pandemic. These loans are essentially small personal loans with favorable loan terms, and many come with an interest rate of only 3%. Of course, in order to qualify for one of these loans, your lender also wants the assurance that you can stick to your payment schedule. However, if your creditworthiness is great and you can show that you are dealing with short-term financial hardship (e.g. you were on leave but expect to be employed again in a few months), then you can qualify.
Explore your options for cheap borrowing
Whether you need money because of the ongoing pandemic or some other reason, your goal as a borrower should be to get your debt as cheap as possible. In this regard, a personal loan is a much less expensive option than credit card debt. While getting a personal loan approval usually depends on having a job, there are ways to get around it, especially if you have another source of income. So don’t assume that this loan option is off the table just because you are currently unemployed.
Our pick of the best personal loans for 2020
We checked the market to bring you our shortlist of the best personal loan providers. Whether you want to pay off debt faster by lowering your interest rate or need some extra cash to make a big purchase, these top-notch tips can help you meet your financial goals. Click here for the full overview to our top picks.
The Motley Fool owns shares of and recommends MasterCard and Visa, and recommends American Express. We firmly believe in the Golden Rule. As a result, editorial opinions are ours only and have not been previously reviewed, approved or endorsed by included advertisers. The Ascent does not cover all offers on the market. The Ascent editorial content is segregated from The Motley Fool editorial content and is produced by a different team of analysts.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.