Credit used to be easy to come by. So did a job. Now both are rare. If you need both at the same time, you can almost forget about it. Loans for the unemployed can be hard to find.
This is a guide on how and where you can find loans for unemployed people. If you are really desperate, also consider filing for unemployment benefits. Otherwise, here is a primer on finding the best loans.Unemployed Loans Do Exist, but They’re Tricky to Get
And no, I don’t mean loans that don’t have jobs! I mean loans for unemployed people. I use the terms loans for the unemployed and unemployed loans interchangeably.
The truth of the matter is that I have a friend who has been unemployed for more than two years, and he has more offers of credit than almost anyone I’ve ever met. How can you do that too? Glad you asked!
Loans for the unemployed are available if you qualify. But to qualify, you have to have a job, right? Wrong. In order to qualify you just have to be able to convince lenders that you’ll be able to repay the loan. In this respect, loans for the unemployed are no different than any other types of loans.
Up Your Chances of Getting a Loan, Even if You are Unemployed
The first thing you have to do is take a personal inventory.
- What is your credit score?
- What assets do you have?
- Who do you know that could loan you money other than a bank or lending institution?
- What do you already owe and are you current on those payments?
- Do you know anyone who would help you qualify for guarantor loans for people with bad credit?
Credit score.
A good credit score alone is sometimes enough to qualify. Past performance is a good indication of the future, and a strong history tells lenders that you might be a good risk, even though unemployed. Loans for the unemployed are based on this criteria all the time. That’s how my friend does it. He meticulously guards his credit score and makes sure that it is as close to perfect as possible. On that basis alone, he is extended offers of credit without ever lifting a finger.
One way to increase your credit score is to get a secured credit card. These types of credit cards are available even to people without jobs. To get a secured credit card you might have to send cash to the credit card company. The credit card company will hold that cash as collateral. Make sure you meet your credit card obligations by paying your bill every month, in full (not just the minimum payment)!!! If you miss a payment or fall behind, the credit card company can keep your cash and send a negative report to the credit agencies. Then an unemployed loan will be almost impossible to get!
Coming up with extra cash to collateralize a credit card might seem nearly impossible if you are reading an article about loans for the unemployed, but as soon as you are able, it’s highly advisable that you take this step to start building a positive credit file.
By building good credit, you’ll increase the options available to you in terms of credit offers. Credit cards are not generally a good source of loans, as they charge very high interest rates. But if you are desperate, they can provide a cushion in the form of short-term loans for the unemployed. When you get a job, pay them off quickly or they can overtake your life!
Assets.
Assets alone are often enough to encourage lenders (or pawn brokers) offer loans for the unemployed, because assets can serve as collateral.
You have to take an inventory of your assets. An asset is anything that you own free and clear. If you are making payments on it, then it’s probably not an asset. For example, if you own a home but have a mortgage payment, you cannot consider the entire home an asset. You can, however, consider your equity in the home as an asset. Equity is simply the value of the home minus what you owe on it. If you owe more than the home is worth, then you have zero equity.
Run through this analysis for everything you own. If you have assets that you own outright (i.e. without debt), then you can often get a secured, unemployed loan. Such a loan can take the form of a pawn transaction, where you physically give the item to a pawn broker in exchange for cash. In extreme examples, you can even pledge the title to your car in exchange for a loan. This is NOT advisable, however. You will likely pay through the nose for any such loans.
If you have home equity or significant equity in a vehicle, refinancing through a bank or other reputable lending institution is a viable option, as interest rates are very low at the moment.
Loans for the Unemployed . . . It’s who you know
Also take inventory of anyone that you know who might be willing to lend you money. Friends, family members, former co-workers are are relevant. If you are unemployed and getting desperate, you will be able to put together a list like this. I know from experience! If you have good relationships with people who have money, you can likely get a loan. Just don’t be pushy, and don’t burn bridges. Do what you say you will do.
Current Credit
Do you currently have credit cards or other open lines of credit like a mortgage? If so, are you meeting your current obligations? If yes, then consider asking for an extension to your current line of credit. Remember, lenders view past performance as an indication of the future, so if you have a been a good customer, then you very well may get a credit line increase.
Loans for the unemployed ARE out there. Before you go on the hunt, take a personal inventory. Know your options. And put yourself in the shoes of the lender. Ask “Would I lend myself money?” You have to base the answer to that question of objective information that outsider can rely on. “I’m good for it” is not enough. Being desperate is not enough either.