Learn why you might qualify for a personal loan even if you’re unemployed
Being unemployed can be extremely stressful. And if you’re thinking about getting a personal loan to help you through a tough time, you probably have a lot of questions running through your mind. Can you get a loan without a job? What types of personal loans are there? And what are the risks you should consider?
Here are some things you should know about getting a personal loan without a job and some questions to ask yourself before taking on any new debt.
Things to Consider Before Taking Out a Personal Loan
If you’re unemployed and applying for a personal loan, there are some things you should think about first. Taking out a personal loan can have short- and long-term financial consequences that you should be aware of.
Can You Make On-Time Payments?
With any debt, you should think about whether you can consistently make the minimum payments on time. Late payments might affect your credit score and can come with late fees. And if you can’t pay back the loan, the lender might be able to start debt collection, file negative information on your credit report, take your property or even sue you.
Do You Understand the Terms of the Loan?
Make sure you understand the terms of the loan completely. That includes things like the interest rate, payments, fees, penalties and more.
Do You Know the Risks?
When looking at a personal loan, it’s not a bad idea to think through the best- and worst-case scenarios. Here are some questions to consider:
- Is a personal loan your best option?
- What could happen if you can’t make payments?
- Could you lose your car or home?
- Considering interest, what will you likely end up paying in total?
Common Factors Lenders Consider
Every lender has different credit policies that they use to determine whether a potential borrower is likely to repay their loan, which is also known as credit risk.
But what happens if you’re looking for a personal loan while unemployed? Do you need to have traditional income from an employer to get approved for a loan?
What Counts as Income?
If you’re applying for a personal loan without a job, lenders might still require proof of income. But it doesn’t necessarily have to be income from an employer.
- Alimony
- Certain disability payments
- Unemployment benefits
- Interest and dividends
- Social Security payments
So if you’re wondering how to get a loan without a job, you might want to think about whether your alternative sources of income can support a loan payment.
Types of Personal Loans for Unemployed Borrowers
If you’re looking for financial relief while you’re unemployed, be aware that there are some types of credit you may want to avoid. And it’s important not to overlook the serious risks that could come with them. If you’re unemployed and considering a personal loan, make sure you understand your options before you make any decisions.
Secured Unsecured Loans
According to the Federal https://americashpaydayloan.com/payday-loans-wi/ Trade Commission (FTC), secured loans are linked to an asset, like a car or a house. Unsecured loans, on the other hand, are loans that aren’t tied to an asset.
If you’re deciding between a secured or an unsecured loan, there are things to consider about each option. For example, if you can’t pay back a secured loan, the lender might be able to take your property to get its money back.
According to the Consumer Financial Protection Bureau (CFPB), lenders might consider unsecured loans to be riskier than secured loans-and unsecured loans may have higher interest rates. And keep in mind that lenders can still take action if you don’t pay back an unsecured loan. That could include starting debt collection or suing you.