When you’re unemployed, it can seem practically impossible to get approved for a loan. Most lenders rely heavily on your creditworthiness and income to determine if you qualify for funding. Having less than perfect credit isn’t necessarily a deal breaker, but not having a steady salary could mean that you get hit with rejection after rejection.
Wondering what to do if you aren’t currently unemployed but need fast cash? Some lenders may be open to give you the financing you are looking for if you meet certain criteria, such as holding sizeable assets like a vehicle or real estate, or receiving a regular flow of money through government benefits, child support, alimony, etc.
How to Get a Loan If You’re Unemployed
Loan Options
- Cash advances with no income
- Car title loans with no income
- Debt consolidation loans with no income
- Home equity loans with no income
- Installment loans with no income
- Pawnshop loans with no income
- Credit card cash advances
Cash Advances with No Income
Cash advances or payday loans are one of the quickest ways to get cash in your hand. You have the option to apply online for a cash advance and receive funding as soon as the next business day. However, if you visit a brick-and-mortar location, you may walk out with the loan proceeds the same day.
All you have to do is complete a quick application and provide proof of income. For the latter, not all lenders require that you be employed. They may accept income generated from self-employment, government benefits, court-ordered payments (i.e. child support and alimony) and unemployment income.
But you should be aware that cash advances aren’t without drawbacks. In fact, the interest rates that accompany these loans are some of the highest in the industry. And some lenders allow you to refinance the loan if you can’t afford to pay the balance in full (plus any interest and fees) by the next pay date. This only perpetuates the debt cycle as each extension tacks on more interest and fees and you could ultimately end up paying more in interest than you actually borrowed in the first place.
Car Title Loans with No Income
You may be able to get a title loan if you have a vehicle with a clear title, or free of any liens. However, you’ll need to hand your title over to the lender to secure the loan. The loan amount is determined by the value of the vehicle. And if you’re unable to keep up with the payments, your car will be repossessed and sold by the lender to recoup their monetary losses.
These loans are accompanied by higher interest rates than what you would find with personal loans from traditional banks and financial institutions. However, the repayment terms are usually lengthy, so your monthly payments will be affordable.
An important consideration: while it’s relatively simple to get approved for a car title loan when you’re unemployed, you should carefully weigh the pros and cons of this option before moving forward with the application process. If you rely on your car to get to and from interviews and you get into a situation where the monthly payments are far too much to handle, you could find yourself without a car, which makes it even harder to get back on your feet financially.
Debt Consolidation Loans with No Income
Debt consolidation loans are designed to reduce your monthly debt payments and pay off your outstanding balances faster. When you apply and are approved, the loan proceeds are used to pay off all your high-interest debts (up to the loan limit). That way, you’ll have a clean slate and a single loan payment with an interest rate that could be lower than what you were previously paying.
This is good news if you’re unemployed with very little income coming in, but you should use caution when considering a debt consolidation loan with no income.
For starters, you need to make sure the new interest rate you’re receiving will actually save you money and not do the opposite. While it’s ideal to have some cash on hand when funds are low, not being mindful of your loan’s interest rate can cost you substantially down the line. It’s unlikely that you will necessarily get substantially lower interest rates (or anything lower at all) if you’re unemployed and have a poor credit history, so you need to weigh these considerations too before opting for a debt consolidation loan.
You also have to be careful not to resort back to the credit cards you paid off as a source of income. Otherwise, you’ll have double the debt you started with and dig an even bigger hole for yourself.
Home Equity Loans with No Income
Similar to car title loans, home equity loans require that you put your home up as collateral to get approved. The loan amount you’re approved for is usually based on how much equity you have in your home and your ability to repay what you borrow. It is quite difficult to get a loan of this sort while unemployed, but there are some lenders that may be willing to assist. But beware of the hefty interest rates, and keep in mind that you could lose your home if you’re unable to keep up with the monthly payments.
Pawnshop Loans with No Income
Have you tried pawning your assets for cash? As long as your asset holds value, there are very few reasons why you wouldn’t get approved. In fact, they don’t require proof of income and aren’t concerned with your employment status. And with a pawn loan, you could walk out with your cash in minutes.
Even better, you’ll be able to retrieve the item you pawned as long as you pay the loan off by the due date. But if you don’t, they will keep your item, along with any payments you’ve made up to this point, and sell it to recoup their losses from your inability to meet your debt obligation.
Credit Card Cash Advance
As a last resort, you have the option to translate a portion of the available credit on your credit card into cash. If your credit card didn’t come with a PIN, you can call your credit card issuer and request a new one or possibly reset it online or over the phone.
Retrieving cash from your credit card is as simple as visiting an ATM and making a withdrawal. But keep in mind that a higher APR will apply, and falling behind on the payments will result in damage to your credit score and the closure of the credit card after a 90 or 120-day window.
Qualification Criteria
Being unemployed means you won’t be able to provide proof of income. Unfortunately, most traditional and some online lenders require it as a prerequisite to be approved. And failure to provide it automatically results in the denial of your application.
The good news is no income lenders may approve you if you meet the following criteria:
- Receive government benefits, including social security, disability, and unemployment
- Receive a recurring deposit to a bank account that’s in your name
- Possess assets, like real estate, that can generate income
- Are currently self-employed
While you may have thought a lender would be willing to loan you the funds you need without any incoming resources, that’s definitely not the case. Any lender will want to make sure they will recoup their funds, plus any interest and fees.
For this reason, if you are approved for a no income loan, expect a hefty interest rate, especially if you are unemployed. This protects the lender against sustaining huge losses in the event you’re unable to repay the loan.
Are You Having Trouble Getting Approved for a No Income Loan?
Get a cosigner
If you’re unable to borrow the money from a relative or friend, consider getting a co-signer. Look for someone with good credit and a verifiable source of income.
But keep in mind that not everyone will be too keen to be a cosigner on any borrowing, since they’ll also be signing on the dotted line with you and will be responsible for making payments if you default on the loan. Failure to repay the loan will result in the delinquent account being reported to the credit bureaus and could lead to a judgment by the court ordering them to play their part in repaying the lender.
Work on your credit
Lenders that agree to grant loans to those who are unemployed may place a major emphasis on your credit rating. And if you don’t want it to be the reason you don’t get approved for a loan, it’s worthwhile to spend some time fixing it.
For starters, get a copy of your credit report from AnnualCreditReport.com. You can access a free copy annually from each of the three credit bureaus, which are Equifax, Experian, and TransUnion.
Next, review the reports in their entirety and highlight or circle any inaccurate, untimely, and negative information. File formal disputes with the credit bureaus to have any errors rectified. And for the negative entries, work with the creditors to determine if there’s a way that you can have them removed.
A few more tips:
- Make payment arrangements with creditors to lower your monthly payment amounts and keep them from reporting delinquent payments. Payment history accounts for a whopping 35 percent of your credit score, and just a single 30-day late payment could decrease your score by as much as 110 points, notes Equifax.
- Use any spare funds you have at your disposal to get current on past due debt. But since it’s highly likely that you don’t have very much extra cash lying around unless you saved a ton before you became unemployed, you’ll need to get creative. So, it’s best to start with the budget you do have and make plenty of sacrifices to free up funds. Not only will you then be able to get caught up on any past-due debt balances, but you will also start rebuilding your credit score through this process.
The Bottom Line
If you’re unemployed and desperately need funds, a no income loan may be a viable option. And with so many loan types to choose from, you shouldn’t experience too much difficulty when choosing one that will best suit your needs.
Keep in mind that the words “no income” may be a misnomer. Most lenders offering no income loans may be able to look past the fact that you’re unemployed, but they will still expect you to at least have some regular monetary inflow whether through government benefits like disability and social security, or a periodic deposit to your bank account in the form of alimony, child support, etc. Alternatively, you may need to own a significant asset like a vehicle or real estate that you can put up as collateral in exchange for a title loan.
In any case, it’s a must that you conduct a cost-benefit analysis of each type of no income loan, and read the fine print carefully if you’re approved for this type of financing, to avoid digging yourself into an even deeper fiscal hole because of high interest rates or other fees and costs associated with such loan products.
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