Unemployment makes it difficult for many people to make ends meet. It can lead to a lot of stress, especially when there are bills that need to be paid quickly and sporadic loans that need to be taken out to pay those bills. In this blog post, we will discuss what personal loans are and how you can get one even if you’re unemployed.
What Is A Personal Loan?
A personal loan is an amount of money you can borrow to use for different purposes. Among the many uses of a personal loan are debt consolidation, home improvement, and wedding planning.
You can get a personal loan from a bank, a credit union, or through an online lender. The borrowed money must be repaid over time, usually with interest and additional fees.
Are There Loans Available For The Unemployed?
Loans for unemployed people are available in many formats. There are loans that can provide assistance for the acquisition of a new job, loans to get back on your feet, and loans that will allow you to go back to school.
An unemployment loan is often not just an option but rather a necessity. When you have no income coming in, loans for the unemployed can provide a much-needed temporary financial solution.
How Do I Qualify For A Personal Loan If I’m Unemployed?
Personal loans for people who are unemployed can be obtained by applying at pre-approved loan providers like NerdWallet or MyLoanCare, which have loans available for borrowers regardless of their credit score.
You can also apply for loans at banks or credit unions by finding one that offers loans to people with no income. This option can be more attractive if you’re trying to save money by paying less interest. However, it does not provide access to some of the additional benefits that other lenders offer such as flexible repayment plans or ways to modify your loan terms should circumstances change.
As an unemployed applicant, it is essential that you are prepared to provide extraordinary evidence of your ability and willingness to repay the loan in a timely manner which includes a verifiable job experience, invoices, current pay stubs, and documentation from other sources that show you are capable of returning the money.
Lenders may also consider any of the following as your sources of income:
- Unemployment benefits
- Disability payments
- Rental income
- Social Security
- Investments like annuities
- Child support
- Regular payments from a settlement
What Is The Importance Of Credit Score When Applying For A Personal Loan?
One of the most important factors that most lenders use to determine your eligibility for a personal loan is your credit score. If you have poor or no credit, it’s harder to get approved because they’re less likely to believe that you will be able to pay them back.
Here are some ways to improve it and make yourself more eligible for personal loans:
- Opening up new lines of credit (you can often get approved with just one good account)
- Paying off your debts on time.
- Getting back on the job hunt or working on your credit score.
How Much Should You Borrow And Why It’s Important
If you borrow too much, it can create a major financial problem. It is not recommended that people try to get loans for old credit card balances or other types of consumer debts with their new loan because this will just end up creating new debt.
If you want to buy something, save for it and pay cash in full with the purchase or get credit cards which are more manageable than loans. Loans should only be used for emergencies not as a band-aid solution to overspending.
Reasons Your Loan Could Be Denied
A personal loan can be denied for the following reasons:
- You have an insufficient credit score.
- Your unemployment has been deemed as voluntary by the lender.
- There are other negative marks on your credit report such as collections, bankruptcy, judgments, etc.
- You have high balances on other credit cards.
- You have a low income or insufficient income information to support your debt repayment ability.
If you’re struggling to keep up with your bills, call your creditors and explain your situation. They may offer paused payments, deferment, forbearance, new repayment plans, or other forms of financial relief.
In Conclusion: Loans for Unemployed
It is possible to find a loan that will work for you even if you are unemployed. However, there is no such thing as a “one size fits all” and they may not always have the best rates or terms. It’s important to do your research before deciding on applying for one because it can impact the amount of money you need to borrow and the interest rate you’ll have to pay. It is also important to check whether or not this type of financing is available at all for those without income.