loans for unemployed

Unemployed? Here’s how to qualify for a loan

If you are unemployed, you may be wondering if you can qualify for a loan. With this guide, we will walk you through how to obtain a personal loan for unemployed people.

Unemployment can wreak havoc on your finances. In the midst of financial instability, a personal loan may look like a good option to keep your head above water.

Personal loans can be useful in order to cover life expenses. However, if you are currently unemployed, qualifying for a loan can be more difficult. It is not impossible, however. The lender will most likely take a deeper look into your credit history and make some hard decisions when evaluating your ability to pay the loan back.

If you are looking to apply for a loan while unemployed, there are a few things to consider before qualifying for a personal loan, including important information and other options.

loans for unemployed

How lenders evaluate your loan application

When you apply for a loan, there are a variety of factors that lenders use to determine your qualification. During the application process, they are judging the risk you represent to them. Lenders take the following into consideration:

  • Income

Because your source of income is one of the most important factors used, being unemployed can make the approval for a personal loan more difficult. However, if you have proof of income outside of a traditional 9-to-5, you may qualify. Other types of steady income that can lead to qualification include:

  • Spouse: Some lenders allow your spouse’s income to be included on the application. If you can use this income to repay the loan, this can be a great way to qualify. However, they may need to cosign the loan in order for you to qualify.
  • Investments: Investments, like rental properties or capital gains can also indicate your ability to meet loan payments on time. Any recurring income from investments may be used as a source of income on a loan at the discretion of the lender.
  • Retirement benefits and other payments: Things like retirement benefits, unemployment benefits, child support and alimony may be used as a source of income to qualify for a loan. However, it is important to note that The Equal Credit Opportunity Act directly prohibits lenders from requiring you to disclose income from public assistance programs or child support.
  • Debt-to-income ratio

Your debt-to-income ratio is another factor used to determine your ability to repay a loan during the repayment term. If this number is high, it indicates to the lender that you do not have enough income to pay your debts back and to pay for your day-to-day expenses.

This number is calculated using your monthly debt payments and your gross income. The numbers are divided to determine your debt-to-income ratio.

  • Credit history

Your credit history becomes even more important for loan qualification in the advent of unemployment. Lenders will look at your credit report, analyze credit scores, payment history, current credit card debt, and more. A strong credit history can help you qualify for a secured loan.


When you take out a loan, you present a risk to the lender and vice versa. When you are unemployed there are a few risks that lenders will heavily consider:

  • Missed payments

When you take out a loan when you are unemployed, the worst thing that can happen is that you cannot pay the loan back. Continuous late payments can destroy your credit. In addition, it will lead to additional fees and interest. Defaulting on payments can make your current financial situation even worse.

  • High interest rates

If you do qualify for a loan while being unemployed, you will probably receive much higher interest rates. A higher APR will increase the overall cost of your loan far above the primary loan amount.

  • Shorter repayment and loan terms

Not only will you be facing higher interest rates, but the lender will also most likely limit your repayment terms. Risky borrowers tend to receive these shorter repayment periods.

How to apply for a personal loan

Whether you are applying for a personal loan or a payday loan, the process is relatively similar.

Start by looking at your finances and determining how much money you need. If it is to cover living costs, think hard about how much you actually need to live and consider all of your expenses before applying. 

The next step is to look into your credit history and ensure everything on it is accurate. Dispute any errors before applying for a loan. After this, start shopping around for lenders. Look for companies that will give you approval odds before the formal application process. 

Then, it is time to apply. Most loans can be applied for online. Be aware that submitting a formal application requires a hard pull on your credit report, which may negatively impact your credit score temporarily.

Other options

If you want another option besides a personal loan, consider the following:

  • Credit cards

Many credit cards offer cash advances to use your line of credit elsewhere. However, credit cards have extremely high-interest rates, with even higher rates and extra fees for a cash advance. If you decide to go for a cash advance, pay off the balance in full and on-time. These are best for short-term needs,

  • Lines of credit

Lines of credit are similar to credit cards. You can add to your balance and pay it off over the life of the account. Like credit cards, they have a minimum monthly payment. You only pay interest on outstanding balances.

  • Secured loans

You can use your existing assets as collateral for a loan. This offers less risk to the lender, as they have the right to take any collateral in the event that you fail to repay the loan. Always look into interests and other fees associated with secured loans.


Although getting a personal loan without a steady source of income is hard, it’s not impossible. Always weigh out all of your options and be mindful of interest rates, fees, and alternative options. 

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