Getting a loan while unemployed
Your ability to get a personal loan doesn’t depend on your employment status, although it might seem that way at first. Here’s how to get a loan while you’re out of work:
How to qualify for a personal loan while unemployed
The income you use to repay the loan debt does not have to come from an employer. The best personal loan lenders understand that everyone’s situation is different.
A lender will consider any of these as income:
- Unemployment benefits
- Child support
- Disability payments
- Investments like annuities
- Social Security
- Rental income
- Regular payments from a settlement
If you don’t have a steady income, ask your lender if you can use something of value as collateral. When you get a loan with collateral, the loan is known as a secured loan, and lenders can take this collateral if you’re unable to pay. Examples of collateral include:
- Savings account
- Retirement account
- Something else of value
Personal loans that don’t require collateral are known as unsecured loans. With unsecured loans, the lender can’t take your house, car, or other possessions if you miss payments. But unsecured loans are harder to get approved for. If you’re struggling to get approved for a loan, find out if your preferred lender offers secured loans.
What can I use a personal loan for?
A personal loan can be used for anything — if you have debt piling up, you’re probably focused on things like:
- Paying mortgage or rent
- Buying food
- Covering utilities
- Paying for prescriptions
What credit score do I need to get a loan?
Generally, you’ll need a score of 580 or higher to qualify for a personal loan (Although the credit score needed for a personal loan varies by lender and it may be possibly to qualify with a lower score).
If you need an emergency loan and don’t have time to improve your credit score, you’re not alone. Look for loans for bad credit. These lenders will have experience working with low-credit borrowers and will be more likely to approve you for a loan.
Should I get a loan while unemployed?
Yes, if you need it — and if the payments won’t add additional worry to your life.
If you can’t afford to make the monthly payment on a loan, look for a less stressful way to cover expenses. You are likely more stressed right now than you have ever been in your life, and if adding one more bill to your life adds more strain, take care of yourself by not taking on the obligation.
Below, we’ll cover some alternatives that might be less stressful than a loan.
View more information: https://www.fool.com/the-ascent/personal-loans/unemployed/