Unemployment is something that no one wants. It might be a dire time and you’re in desperate need of a personal loan, but being unemployment means that lenders or banks will be wary of issuing you that loan.
However, unemployment doesn’t mean that you can’t get that loan and in this article, we are going to discuss how to get a loan if you are unemployed.
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Loan Criteria
source: economictimes.indiatimes.com
Few factors make up the decision on whether or not a lender will give you a personal loan. Those factors are:
– Income: the biggest factor when it comes to getting a loan approved is your current income. But since you are unemployed, your chances of getting that loan with no income are significantly lower.
– Credit: your credit score, utilization, and payment history are another factor that plays a huge role.
– Debt-to-income ratio: lenders will look at your debt and compare it to your income to verify whether you can handle your monthly payments or not.
From all three, we can safely assume that income is the deciding factor for getting a personal loan approved. And that can be a major problem since you’re unemployed. But there is light at the end of the tunnel, as your income from a job isn’t your only option.
What Are Your Alternatives?
source: justdial.com
If you want a personal loan, you have to convince the lender that you have at least some kind of consistent income. Failing to do so would make you a high-risk client.
There are other alternative options to income from a job, which you can use to convince your lender to give you the loan. Those include:
– Unemployment benefits: If you can manage to qualify for unemployment benefits, that counts as one type of income, according to allthebestloans.com
– Freelance income: a side gig or freelance work would qualify as a type of income.
– Investment income: if you receive money from your investments on constant bases, then that counts as a type of income. Investment income can be money received from stocks, rental payments, or real estate you own.
Regardless of what option you choose, your lender will still require some sort of income verification so that he can approve your loan.
You can also be unemployed and qualify for none of the above, but still, apply for a personal loan. This can be only in the case if you have a job lined up that you can verify true.
Other Things to do if You’re Unemployed
source: themoneypages.com
There are ways that you can apply for a personal loan even if you are unemployed. We discussed income tactics, now let’s discuss something else.
1. Figure Out a Source of Income
The deciding factor when getting a loan, try to find a source of income instantly. This can be a side gig or freelance work.
2. Protect Your Credit
Being unemployed is one thing, but having bad credit is another. You could be approved for a personal loan if your lender sees you have a perfect credit score. To protect your credit, make sure to make timely payments and don’t rack up balances on credit cards.
3. Get a Cosigner on a Loan
This is probably your best chance, but it involves having another person sign off for you. This means that the lender will instead have a look at that persons’ credit score and income. Having a cosigner means that he is essentially applying for the loan, but giving you the money.