If you’re between jobs or unemployed it can be stressful to worry about where funds will come from for basic expenses. Considering a personal loan to carry you through is one option. But it’s not the only option. Even if you have regular work as a freelancer, lenders may consider you to be unemployed.
In either case, when you need extra funds it’s possible to get a loan. You may also have access to government resources to carry your family through lean times. Find out how below.
Table of Contents
Can I get a loan without a job?
It’s difficult but not impossible to get a loan without a job. But you should think twice before taking out a loan if you don’t have the means to pay it back. If you have other sources of income, like freelance work or a spouse’s income, the risk of paying it back is less.
You can get a loan without a job with the help of a co-signer or by putting up collateral. A high credit score will help you secure the needed funds. And requesting a low amount can improve your chances of approval. You can also consider taking a cash advance or borrowing from savings, friends, or relatives.
How to get a personal loan without a job
If you want to get a personal loan without a job and you’re confident you can pay it back, there are several options to consider. Each of these can help you get the funds needed, and several together will make it even easier.
Use a co-signer
Adding a co-signer means someone else signs as a backup on the loan. They are essentially promising the bank that they will pay back the loan if you fail to pay. A co-signer can be a family member or friend. To be effective in getting a loan without a job, the co-signer needs a good credit score and a low debt-to-income ratio.
An ideal co-signer would have a credit score of 700 or higher and a low debt-to-income ratio. Even someone with a lower credit score and a low debt-to-income ratio could help you secure a loan.
The advantage of this option is that with a qualified co-signer, you should be able to get a loan. The disadvantage is that if you ever fail to pay the loan, the co-signer will be required to pay, potentially straining your relationship.
Put up collateral
If you have savings or something else like land or property that you own outright, the bank may be willing to accept it as collateral. Other possible options for collateral include:
- Investment accounts
- Retirement accounts
- Fine jewelry
- Fine art
A loan with collateral is called a secured loan. As long as you make on-time payments, this is one way of getting a loan without a job. But if you fail to pay, the bank has the right to seize the collateral, leading you to lose the valuables you put up as collateral.
Borrow from a retirement account
You can choose to borrow from your retirement account. This is not a traditional loan, but you’ll need to treat it as one to recoup the money spent. When you borrow from a retirement account, the funds that are withdrawn are not allowed to grow for the duration of the loan, having a long-term impact on retirement savings.
When you borrow from a retirement account, there can be a greater temptation to treat it casually, or not pay it back. These behaviors can put you in greater financial need at retirement time.
Improve your credit score
A higher credit score indicates to lenders that you are financially responsible, and there is a low risk that you won’t repay a loan. A credit score of 740 or above is considered very good, while 800 or above is excellent. If you can reduce debt and build your credit score, this can be a way to get a loan or get more favorable interest and repayment terms.
If you need a loan right away, improving your credit score might not be a practical solution as it can take months or years.
In the long term, improving your credit score is an important financial step for any future loans or financial opportunities including mortgages, credit cards, and small business loans. For many building a good credit score can take months or years, making it a long-term credit strategy and not a short-term solution to get a loan.
Borrow from friends or relatives
Borrowing from friends or relatives can be a solution to getting a loan without a job, but it is not without possible pitfalls. Friends or relatives in a position to offer you a loan could give you instant access to funds. But be sure to write the loan terms clearly and adhere to the agreed-upon repayment terms to avoid straining your relationship.
The advantage is the instant access to funds without a credit check. The disadvantage is that it won’t be included in your credit report — or boost your credit score — when you pay back the loan on time. A possible bigger disadvantage of borrowing from family or friends is the potential strain it can put on your relationship. Be sure the friend or relative is someone you can talk to about money and that you adhere to agreed-upon terms to prevent harming your relationship with your loved ones.
Consider a cash advance
A cash advance is available through most credit cards. A cash advance limit is usually less than the total credit card limit. The interest rate on a cash advance is usually much higher than the annual percentage rate (APR) on the credit card, so you’ll end up paying more in interest on this option. But, even with higher interest, the total is usually less than a payday loan. If you have a credit card and expect to be able to repay the loan amount quickly, a cash advance is a way of getting a loan without a job.
Avoid payday loans
Payday loans offer instant cash, but charge high interest and fees that can be equal to 25% or more of the total loan in two weeks. Payday loans prey on people who think they can’t get a loan another way. They’re designed to reach those who have no other option and trap them in a cycle of debt. You have many other options we’ve discussed here. Avoid a payday loan as it can put you in the position of needing a loan again next month.
Risks of taking out a loan without a job
Of course, taking out a loan without a job isn’t without risks. If you have another source of income, like a spouse’s paycheck, Social Security, alimony, or freelance work, the risks are lower. But if you don’t have any sources of income and don’t know when you’ll get a job, taking out a loan could mean that you sink deeper into debt. If you’ve put up your house or other property as collateral, you risk losing it. And interest and fees can pile up, leading to even more expenses.
What to do if you’re not approved for a personal loan
If you’ve not been approved for a loan, there are still steps you can take to get a loan. Here are the options to get a personal loan after you weren’t approved.
Lower your loan amount
If you asked for a high loan relative to assets or debt, lenders will usually not approve it without proof of income and a high credit score. If you lower the requested loan amount, you could still be approved. If you asked for a loan of $5,000, consider a loan of $2,500 or $1,000 to increase your chances of loan approval.
Wait until your credit score improves
A higher credit score can help you get approved for more loan options. If you can wait for even four to six months and focus on building your credit score, the higher credit score could be enough to tip the lender’s decisions in your favor. You can also take out a short-term credit-builder loan to boost your credit score.
Consider alternatives to taking out a loan
Reconsider why you need the loan and explore resources for assistance where possible. Government programs to find affordable rental housing are available. You can apply to the Supplemental Nutrition Assistance Program (SNAP) or call the USA National Hunger Hotline to get immediate assistance. You can call 1-866-348-6479 for help in English or 1-877-842-6273 for help in Spanish. Free food for seniors programs and food for victims of natural disasters also are available.
In addition to government assistance, you can consider the non-traditional loan options above, including borrowing from savings, taking a cash advance, or asking friends or relatives for help.
Final thoughts on how to get a loan without a job
Getting a loan without a job is often an option, especially if you use a co-signer or put up collateral. But there are other ways to get the funds you need, from government support to borrowing from savings. While focusing on immediate cash needs, be sure to work to build your credit score and find other streams of income like a side gig or freelance work so you can pay back the loan and reach your next financial goals.
Can you get a loan without a source of income?
Yes, you may be able to get a loan without a job based on your assets and a good credit score. You can also get a loan if you use a co-signer with a good credit score and a low debt-to-income ratio.
Can a housewife apply for a loan?
Yes, a housewife can apply for a loan and use her spouse’s income as proof of income. There are also loans specifically for housewives that don’t require proof of income. A good credit score is still important for loan approval.
Which types of loans do not require income proof?
Stated-income, stated-asset loans don’t require proof of income. Housewife loans also often don’t require proof of income. If you have assets to use as collateral, you may not have to show proof of income.