If you are thinking about taking out a personal loan to make ends meet during these tough times, you might have a lot of questions running through your mind. One of these questions might be, “Is it even possible to get a personal loan even without a job?”
The answer is yes!
You can take out a personal loan while unemployed. However, you should know the vital factors first before you apply for a personal loan. Here are some questions you should ask to help you decide on whether or not you should get a personal loan despite your current unemployment situation.
Can You Make Payments On-Time?
It is vital to ensure you can make payments on-time when it comes to any debt. This is because late payments might hurt your credit score. Not only that, but it can also trigger late fees. Furthermore, if you end up not paying the loan, the lender might start debt collection, sue you, file a negative remark on your credit report, or take your property.
Do You Understand The Terms of the Loan?
It would help if you ensure you know and understand the terms of the loan. This includes the essential parts of the loan, such as payments, interest rates, due dates, penalties, fees, and more.
Are You Aware of the Risks?
It would be best to look into the best- and worst-case scenarios when it comes to getting a personal loan while unemployed. Here are some factors you might want to consider:
- Is taking out a personal loan right for you?
- What could happen if you can’t make on-time payments?
- Could you lose your home or car?
- What would you pay off in total considering that interest is added?
Personal Loan Applications: What Lenders Look Into
When you apply for a personal loan, lenders tend to look at factors determining their loan offer. Here are some of these factors:
- Income. Lenders will look at your income because it is an assurance that you have the means to pay back the loan;
- Credit. Before a lender decides to loan you money, they will most likely get a copy of your credit file to evaluate your payment history, credit score, and utilization.
- Debt-To-Income Ratio. The lender will check on any debt payments you have in relation to your income to make sure you can handle your monthly loan payments.
Alternate Forms of Income
Since you are currently jobless, you might need to make up for the income part that lenders look into. If you can’t provide that, the lender will look at you as a serious risk to default on a loan. Here are the alternate forms of income you can use to improve your personal loan chances:
- Unemployment Benefits. If you are receiving unemployment benefits, that will count as income.
- Freelance Income. If you have any income due to freelancing or having a side gig, that would count.
- Investment Income. If you are consistently receiving money from your investments, that will be considered income.
It would be best to keep in mind that no matter what alternate forms of income you choose, the lender will tend to require income verification. Moreover, another way to get a personal loan even without an income is if you have a pending job offer. Some lenders are okay with it as long as you can verify your future job.
Things You Should Know Before You Take Out a Personal Loan While Jobless
The following are some steps you can do in taking out a personal loan despite your current jobless situation:
Know Your Source of Income
It will help if you start generating income despite your unemployment status. This is to show the lender some form of consistency when it comes to your income. Moreover, this could mean getting a side gig, freelance work, or even signing up for unemployment benefits as soon as possible.
Protect Your Credit
It would be best to protect your credit, especially when you plan to get a personal loan. If you lose some points on your credit score, it will impact your loan approval chances and the potential interest rate you might get. Furthermore, in order to protect your credit, it is recommended to pay your bills on-time.
Choose a Lender That Best Suits Your Needs
When choosing a lender, there are two things you should consider:
- Credit Score Requirements– There are lenders that can provide personal loans for excellent, fair, and bad credit. That is why you need to know where you stand and look for the lender with the minimum requirements you meet.
- Amounts Offered– Several lenders will offer different types of borrowers with a wide range of amounts. This will depend on how much you need as well as your repaying ability.
Yes, it is possible to get a personal loan even without a job. However, it can be challenging, especially when it comes to providing a source of income. Furthermore, in case you can get a personal loan despite your current unemployment, you should keep in mind that you will need to make payments on-time. If you fail to do so, you might hurt your credit score and ruin the borrowing chances you might have in the future.
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