How to Get a Loan if You Don’t Have a Job

Can I Qualify for a Loan With Alternate Income?

If you can't provide proof of employment, your lender will want to review your financial records to verify other source(s) of income. While unemployment benefits can represent a portion of your income stream, their temporary nature means you shouldn't rely on them alone. Other forms of income lenders may accept include:

• Social Security benefit payments
• Pension funds or other retirement benefit payments
• Disability income
• Alimony or child support
• Government annuity payments
• Regular proceeds from a trust
• Recurring interest or dividend payments
• Veterans Affairs benefits
• Public assistance
• Income from your spouse or partner (if they're a cosigner on the loan)

In addition to proving income streams, you may also be able to qualify for a loan by showing evidence you have access to a significant supply of cash, whether that's now (in a savings account, for instance) or later. A few situations a lender may accept:

• A pending employment offer or contract for freelance work
• Pending sale of real estate, securities or other investment property
• An upcoming inheritance

What to Consider Before Taking Out a Loan While Unemployed

Before taking out any loan, regardless of your employment status, it's important to be honest with yourself about your ability to fully repay the loan as agreed. Missing just one payment can do significant damage to your credit, and defaulting altogether will put a major blot on your credit history.

Be realistic about your ability to cover the monthly payments for the life of the loan. If there's any doubt, consider skipping the loan or borrowing a lower amount you can comfortably repay.

Depending on the nature and volume of your income sources, lenders may consider your unemployment reason for caution, which could cause them to alter their loan offer in several ways, including:

• Lowering the loan amounts you're eligible for
• Expecting full repayment of the loan in a shorter period of time
• Charging higher interest rates and possible origination fees to offset costs of pursuing payment if you default on the loan
• Requiring payment via automatic deductions from your bank account to reduce the chances you'll miss a payment

Where to Get a Personal Loan

A personal loan, which doesn't require you to secure it with property such as real estate or a car, is the type of loan best suited for getting ready cash quickly. Personal loans are available from many lenders.

A great place to start looking for any loan, unemployed or not, is the financial institution where you have your checking account. Even in a world of automated decision making, an established relationship can still work in your favor.

If your preferred institution is a bank, consider applying for a loan at a local credit union as well. Credit unions often have competitive rates and may also have lower credit score requirements than banks. If they extend a loan offer you want to take, you'll have to become a credit union member before the loan is processed. Membership usually requires an open account with at least a few dollars in it—a small price for a good deal on a loan.

Online financial institutions, including peer-to-peer lending sites, typically provide quick lending decisions, and it's easy to use them to submit multiple applications at once.

Online services, such as Experian's personal loan finder, can show you loan offers suited to your FICO^® Score.

Can I Get a Loan if I Have Bad Credit?

If your credit is poor, it can make it harder to get approved for a loan. But if you're a little creative, very persistent and willing to accept a higher interest rate, there are ways to get a loan, even with less-than-ideal credit.

If you can wait a few months before applying for a loan, it might also be wise to consider taking steps now to spruce up your credit score. You can't convert a middling score to an excellent one overnight, but depending on your starting score, a few extra points could mean you'll get better deals on loan offers, in terms of interest rates and fees.

What Happens if I Don't Qualify for a Loan?

If you don't qualify for a traditional loan but really need some working cash, the following alternatives could help you get some money to help you with your financial needs:

• Reapply with a cosigner: Enlisting a friend or family member with good credit and regular employment could help you qualify for a loan But if you fail to make your loan payments, you could damage the cosigner's credit and cause them to be held responsible for paying off the loan.
• Home equity line of credit (HELOC): If you're a homeowner and have been making mortgage payments long enough to have significant equity in your house, you may qualify for a line of credit that lets you borrow against it.
  A HELOC works like a credit card, allowing you to borrow against a set limit (a portion of your equity) and enabling repayment, with interest, in monthly payments of variable amounts. If you default on a HELOC, however, you can lose your home.
• Car title loan: If you own your car outright (you don't owe any payments on it), you can use it as collateral on a loan. But if you miss a payment on a car title loan, the lender can seize your car.
• Cash advance: Many credit cards let you make cash advances at ATMs, usually at an interest rate considerably higher than the one that applies to regular purchases.
• Pawnshop: Selling items of value through an online marketplace can be a way to raise cash quickly, but if that doesn't work, pawning or selling items of value at a pawnshop is another option.

Sudden unemployment can be a major source of stress, and a personal loan can help cover expenses so you can focus on job-hunting. Take care to borrow only what you need, and what you're sure you can repay once you're back on solid ground.