How to Get a Loan Without a Job – Getting a loan with no job can be difficult, but it’s not impossible. To qualify for loan without a job, you’ll need to show the lender that you can pay back the money you borrow from them—and that means providing some proof of income, even if it’s coming from your savings. This guide will explain how to get a loan without a job, give tips on how to increase your chances of approval, and offer some alternatives to loans that don’t require a job as proof of income.
Document your income
Any income you receive could help you qualify for an unsecured loan. You’ll have to provide documentation, such as a recent statement. Lenders may consider:
A pension or annuity
Required minimum distributions from your retirement accounts
Being able to document some kind of income could mean the difference between getting an unsecured vs. a secured loan.
Document your assets
If you don’t have enough income to qualify for the loan, you might be able to qualify for a secured loan based on your assets instead. Here are examples of assets a lender might consider:
An online loan is similar to a loan from your local bank. They will usually consider income sources other than employment. Many popular online lenders offer unsecured loans only, but you will find some that specialize in secured loans.
Avoid predatory loans
Title lenders make loans using your vehicle as collateral. Payday loans charge enormous fees. These are considered predatory loans. They are very expensive, and you can end up paying back many times the loan amount.
If you default on a title loan, the lender can take your vehicle (but risking your collateral is true for any secured loan). For some payday loans, you can’t miss a payment because the lender will automatically take the money out of your bank account on payday, even if you need it for other expenses.
When you’re trying to get a loan without a job, you need an unsecured loan. Unsecured loans are based on collateral and promise, as opposed to assets and income. In other words, if you don’t have assets or steady income (like with a job), you have no security for your loan—but that doesn’t mean that lenders won’t give it to you. They might give it in exchange for something else, like your home or other possessions that could act as collateral. Because lenders consider these loans unsecured, they typically come with higher interest rates than most other types of loans.
What can you do with an unsecured loan?
You can use an unsecured loan for most things; home improvements, debt consolidation, and bills are common uses. You can also look into other types of loans if you need money for something more specific. For example, there are payday loans designed specifically for people who need cash quickly but don’t have a steady income. If you already have secured debt (like your mortgage), an unsecured loan could be helpful. Secured debt comes with lower interest rates since you’re giving up collateral in exchange for lower rates—if you make payments on time, your loan company doesn’t need to worry as much about whether or not they will get their money back if you default.
Getting the right info
When it comes to figuring out how to get a loan without a job, your first step is knowing what options are available. That means not only having an idea of what kind of loans exist, but also looking at interest rates and qualifications for each one. You should also know where you’re applying—is it online or through an institution? Either way, make sure you know what documents you need (driver’s license, proof of income) and where they need to be sent.
Understanding your options
First, get clear on your options. If you don’t have a job and need funds now, you can apply for an unsecured loan at any number of lenders, such as banks or credit unions. The problem with these loans is that they require collateral—such as your house or car—to secure them. So unless you have something valuable that’s worth enough to qualify as collateral, it’s unlikely that you’ll be approved for an unsecured loan when you don’t have a job. That said, if you do own something of value, it may be worth taking out a loan against it.
Shopping around and negotiating your best deal
Having trouble getting approved for a loan? If you’re good at negotiating, it may be worth your time to apply for multiple loans from different lenders, then compare rates and payment terms. You can then choose which loan is best suited for your situation, allowing you to get more favorable terms. Keep in mind that your credit score will be impacted by multiple applications for new loans within a short period of time, so if you do plan on shopping around, do so responsibly!
Your ability to negotiate with lenders is all about trust, and that has nothing to do with your job history. Some people are so desperate for cash, they’ll ask everyone in their life for help: family members, friends and even co-workers. If you take on too many investors, you might dilute your ownership stake in your business—and make negotiating more difficult because you’ll have to balance several separate interest rates. For example, if you want a $200K loan at 5% interest with five years of payments and 5% principal reduction every year (called debt consolidation), it’s best not to borrow from 20 different people who are asking for their money back within one year.
Budgeting so you don’t go over budget
If you have any financial goals, like buying a house or paying for college, it’s likely that you’ll need a loan. But just because you need money doesn’t mean it will be easy to get. Banks are notoriously picky about who they give loans to, and many require down payments, credit scores above 700 or even an active job before they approve an application. Even after all of that, however, there are plenty of options that won’t break your bank: lenders may charge high interest rates but they don’t care if you have steady income—so if your credit is bad but your income is good (and you can prove it with three months of pay stubs), get in touch with someone at an alternative lender.
Repaying your debt when you have a low income
It’s often thought that if you don’t have a job, you won’t be able to get credit. But that isn’t necessarily true. Banks and other lenders are always looking for borrowers with good credit (and income) who might need more money than they currently have on hand. If your most recent employer was willing to offer an endorsement of your character, your lender may be more willing to take a chance on giving you money—which means getting credit when you don’t have a job could be easier than you think.
Who it’s best for
Someone who meets the credit requirements and can document income.
Someone who has assets to use as collateral. In the real estate world, this might be referred to as a no income, verified assets (NIVA) loan or a stated income, verified assets (SIVA) loan. A real estate loan is just one variety of secured loan.
No income, no assets (NINA) loan
This is typically not a personal loan. It’s used to finance real estate that’s expected to generate rental income.
Someone who owns a car and is willing to use it as collateral. Title loans typically have a short loan term and high price. A title loan generally does not require a credit check.
Payday loan or cash advance loan
Someone who has a job with a steady paycheck. Payday loans typically have a short loan term and high price. Payday lenders generally don’t require a credit check.
Payday Alternative Loan (PAL)
Someone with a job who is also a member of a credit union. Payday loan alternatives are short-term loans, but typically longer than payday loans, and cost much less. These loans don’t require a credit check.
Family or friends
Someone who knows a person with the means and willingness to help out. This is a personal arrangement that you make with someone you know. To protect the relationship, you should document the amount, interest, payment terms, and any penalties. Treat this lender just like any other. Don’t neglect to make payments just because the person may be more forgiving than a bank.
Someone who has a credit card. Many credit cards allow you to borrow cash. The cash advance credit limit is usually lower than the purchase credit limit. The loan term is whatever length of time it takes you to pay off the balance. Cash advances are almost always subject to a much higher interest rate than purchase, but the rate may still be lower than other types of loans that you can get without a job (like payday loans or title loans).
Someone who has a home, equity, and an income source. This loan uses your home as collateral. You borrow more than you currently owe on your mortgage, and you get the difference in cash. Even though this is a secured loan, you’ll need to have a source of income to cover the payments.
Home equity line of credit (HELOC) or home equity loan
Someone who has equity in their home. This is money you borrow against the equity you have in your home. Even though this is a secured loan, you’ll need to have a source of income to cover the payments.
Debt management plan (DMP)
Someone who needs to lower their total monthly payment. This isn’t a loan, per se, but it may be appropriate if you are struggling to keep up with your debt payments.
A certified credit counseling agency will help you create a 3-to-5-year plan to pay off all your debts with a single payment that may be more affordable than your current combined monthly payments. Creditors might lower your interest rate to help you get through the DMP successfully.
If you’re in need of money, it can be difficult to see how you could get that loan. There are some options available, however, and if your job situation is bad enough that you aren’t sure how you’ll make ends meet, getting that money may be your only option. Bad credit won’t disqualify you either, so don’t assume there isn’t help out there if you need it.