Can I Get a Personal Loan Without a Job?

As of now, the unemployment rate in the U.S. is of 3.6%. You may be one of these people – in this case, you are probably wondering “Can I get a personal loan without a job?”. Considering you don’t have a job, you may need cash for important things, but is this possible without being employed? You will find the answer by reading this article.

Can I Qualify for a Loan with Alternate Income?

Since you don’t have an income from a stable job at the moment, you may have an alternate income. But does this let you qualify for a loan?

Thankfully, yes, it is possible to qualify for a loan if you have alternate income. It also works if you have different forms of income. All that matters is that you prove you have the ability to make monthly payments.

Of course, you will have to be verified for any form of income source since you are not employed. Lenders don’t want to take any risks since they don’t want to lend to people who may not pay off the loan.

Some accepted forms of income are pension funds, social security income, and government annuity.

Other Types of Consistent Income

There are more types of consistent income that will help you qualify for a loan, aside from the ones listed above. Some of them include tip income, savings or cash, capital gains income, retirement, disability income, VA benefits income, alimony or child support and investments. You can also use housing income, inheritance, trust income, public assistance income, spouse/partner income, employment offers or contracts, dividends, and interest income, and capital gains income.

Proof of Alternate Income

If you have alternate income, then you need to make sure you bring proof for it. Otherwise, how will the lender be sure that you are receiving money in some way? Some of the documents you can bring are bank statements.

Other than that, you need to bring documents depending on what type of funding you receive, such as where the money comes from. Some documents that can be used as proof are pay stubs, interests and dividends income statement, proof of gifts and contributions, annuity statement, sales receipts, royalty income statement, and more.

Automatic Payments

You can set up automatic payments in case you have a bank account with money in it. It is a great way to prove that you have a stable bank account. If you’re one of the average 5811.00 people who don’t have a job and thus have no income, then you can set up automatic payments. This way, your lender can have access to your bank account every month, which is beneficial in case you can’t participate actively. It’s also a way to gain the lender’s trust.

Security

If you don’t have an income, you can always use something valuable and secure it to the loan. In the event that you will be unable to pay off the loan, then the valuable item will be used to recover the money. It offers some peace of mind to the lender. Having said that, you can use a car or anything of enough value to be secured to the loan, depending on how much you need to borrow.

That being said, you should bear in mind that if you won’t be able to repay the loan, the lender will have the right to take your valuable item. You will lose possession this way.

A Cosigner

Another way to make sure you are able to get a loan even with no income is to get a cosigner. A cosigner is a family member or a friend who is willing to deal with the loan if you fail to make payments and has the financial situation to do so. If you have someone who wouldn’t mind doing this for you, then you have good chances to obtain some cash.

Still, even the cosigner must have a stable income and a good credit score to be fitting to take this position. Not to mention that you need to be aware that leaving the cosigner to deal with the loan could ruin the person’s credit. It may also ruin the relationship between the two of you.

Risks of Borrowing with No Income

In some cases, a lender will know that you are very likely to be able to pay off the loan, especially if you bring the necessary proof. Even still, they don’t want to take any risk, as there is always the possibility of you being unable to come through with it. Because of this, borrowing with no income can be very risky. Why? Here are a few risks of borrowing with no income.

Shorter Repayment Terms

One of the risks of borrowing with no income is having shorter repayment terms. Usually, no income loans take months, which is way different compared to conventional loans that are taken for a period of a few years. Since you have a shorter repayment term, it means you also have to make more frequent repayments, which can be quite difficult to deal with.

For example, you may have to make weekly payments – which is a hassle.

Higher Interest Rates

Getting a loan with no income will make you have to deal with higher interest rates. Since the lender is taking a huge risk with you because you have no income, it only makes sense that high interest rates will apply. There are even interest rates that go above 300% in APR.

Automatic Payments

You can set automatic payments for your no income loan, but that also means that once the process starts, you can’t stop it. So, your required amount will be deducted when the time is due, as a way to pay off the loan.

Expensive Fees

There are larger fees for a no income loan. In general, there is a fee for a personal loan anyways, but since you are a risk factor here due to not being employed, the fees may be even higher for you. This means that you will have to spend more cash as well.

Predatory Lending

You might fall victim to predatory lending, something you’re surely not looking forward to. These lenders take advantage of people in a bad financial situation and apply high fees and interest rates on the borrower – they also strip them of equity. For instance, while a normal fee would be 1%, a predatory lender might charge you 5%.

Other Options for People without Jobs

In some cases, you may want to look for different options, other than the ones mentioned earlier. If you have no job, you still have access to different methods of getting cash. You will find them below.

3 Options

There are 3 great options that you can use as a no income borrower, such as:

A Secured Loan

Secured loans are great because they give the lender some peace of mind. It would be hard to trust you with cash given you have no stable income source. Even if you have alternate income, it would be better if you took a secured loan as you could secure something valuable to the loan. So, in case you fail to make payments, the lender will take possession of that asset.

Home Equity Line of Credit

You can also try a home equity line of credit. It will be just the same as having a credit card, but with a revolving balance due to the equity in your house.

Short-Term Loan from Family

If you want to rely on your family, you can always get a short-term loan from them. They are your family, and they trust you, so it will be much easier to talk to someone you know when it comes to repaying the loan.

What If I Have Bad Credit?

Apparently, “there are about 220 million scoreable people and 68 million of them have bad or poor scores”, according to FoxBusiness who were reporting on VantageScore. So, if you are one of those people, what can you do to get a loan, as someone with no income? Well, your chances of getting a loan are lower if you have bad credit. But that doesn’t mean it’s absolutely impossible for you to get a loan. There may be some loan limits and requirements from the lender, with high interest rates, but you may still get a loan.

What If I Don’t Qualify for a Loan?

If you don’t qualify for a loan, there are always additional options for you. For instance, you can take a car title loan and secure the paid car to a loan. You can also use cash advance, a short-term loan, or debt consolidation loan. If you have some valuable items, you can also try to go to a pawn shop.

Conclusion

If you’re someone with no income, you may still be able to get a loan, but the process will be just a little more complicated. However, now that you have all the details, you know what to do next. Also, you can always look for more information on Stilt if you still have curiosities about the matter.

Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

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