Getting a loan while you’re unemployed can seem next to impossible. Mainstream lenders like banks and credit unions will likely not be available for you, but there are several specialty loan services that are willing to grant you a loan even if you don’t have a steady income. In this article, we outline the steps for how to get a loan without a job, without a bank account, and even how to get loans if you have neither.
Getting a Loan Without a Job: How Traditional Lenders View Your Situation
Traditional lenders like banks and credit unions generally rely on three factors when deciding whether or not to grant you a loan: your debts, income, and credit score. If you have a lot of debts, no current source of income, and a bad credit score, this may be a difficult option. However, if your problems lie solely with your unemployment, you may still be able to get a loan through a bank or credit union.
For example, even if you don’t have a job, many banks and credit unions will still consider you for a loan if you can prove you have a steady source of income. This could be as simple as a monthly allowance you’re receiving from a relative, child support statements, a trust fund, or anything similar. If you’ve lost a job recently through no fault of your own, you likely qualify for unemployment insurance payment from your state, which many banks consider a source of income.
Another way to get a loan through a traditional lender is to ask someone to co-sign for you. The bank or credit union will also take the income/credit score/debts of the person signing the loan with you into account when they review your loan. Be careful, though—this also means that if you fail to make payments, the cosigner’s credit will be affected, too. Getting a loan from a traditional lender is almost always a better deal than other borrowing options, so it is worth trying if you think you may be able to qualify. However, there are some good alternative lending options that may be better suited to your financial situation, and we’ve listed them below.
Loan Options If You Don’t Have a Job
Note that fraudulent lending scams are common, and many of these scams claim to offer loans to borrowers with no job. All of the options listed below are legitimate lenders with good ratings, reviews, and BBB certification.
Specialized Personal Loans
Personal loans, in general, are any standard unsecured loans offered through a lending company. These almost always require a part-time or full-time job, so if you don’t have a job, you’ll need a specialized loan, which usually has higher interest rates and fees and lower overall amounts than standard personal loans. Specialized personal loans are usually granted for $100 to $5,000, though the amount can go up to $35,000 if you have a very good credit score.
- Process: Each lender has its own application, which requires that you provide basic personal, contact, and bank account information, and possibly (though not always) some proof of a source of income or credit history. The lending company will then send you approval and a selection of rates within a few minutes, based on the information you provided.
- Fund disbursement: Most of these specialized lenders are online services, so you’ll need a banking/checking account to receive the funds. After your application has been approved, the funds should be in your account within 24 hours, and likely sooner, as many of these services work on a very quick schedule.
- Interest rate: As with any non-traditional lender, the rates are going to be higher because the loaner is taking on a bigger risk by providing funds to someone without a job.
- Credit requirement: Specialized loaners will not require you to have a good credit score but most will ask you for your score regardless. If you have a FICO score from 300 to 640, you should still be in the clear. Anything above 640 will help you to get the best rates possible from the service.
- Where to start:
Micro-lender loans function as non-profit, person-to-person loans that you can use to sponsor your goals. The loans are usually a small amount, anywhere from $100 to $5,000, and are a good option for small business owners or aspiring entrepreneurs. These loans usually require convincing a sponsor to lend you the money until you can pay it back.
- Process: It depends on the site and lender, but in general, you’ll fill out an application or a profile, explain what you wish to do with the money, and wait for a bite. If you’re going through a governmental non-profit organization, the process will likely take longer and have a bit more paperwork.
- Fund disbursement: Varies depending on the lender
- Interest Rate: Varies, depending on the lender
- Credit requirement: Depending on the lender, your credit score may not be checked. However, in micro-lending, you’re competing against other people’s ideas, and if your score is above 600, you’ll have a better chance of catching a sponsor’s eye.
- Where to start: Kiva is a nonprofit organization that specializes in peer-to-peer micro-lending, and it can be a great place to start.
Note: Payday loans are not legal in every state. Check to find out the legal status of payday loans in your state.
Payday loans provide quick cash and have the potential to charge a lot of extra fees. These loans function as a way for unemployed individuals and others struggling with financial issues to get a fast loan for a small amount of money — usually $100 to $500, but potentially more depending on the lender. The money is loaned with the agreement that the loan will be paid in full upon receipt of the next paycheck (although some lenders will give the borrower a set date to repay the amount).
- Process: Many payday loan lenders now function exclusively online, though you can still find many physical offices as well. You’ll simply be required to fill out an application form with your personal contact information, bank account information, and your Social Security number.
- Fund disbursement: With a payday loan, the money will be made available to you within 24 hours. Lenders will either deposit the money into your bank account, give you a prepaid debit card, or provide you with cash or a check.
- Interest rate: Payday loans have high interest rates due to how quickly the cash is made available and how lax the application requirements — payday lenders rarely run credit checks, employment checks, etc. The average cost of interest/finance charges is $5 to $40 for every $100 borrowed, and the APR will generally be about 400%.
- Credit requirement: Payday loans do not require a good credit rating. Even if you have a poor credit score or no credit at all, you’ll still likely be able to qualify for a loan.
- Where to start: See our article listing more than 10 places to get a payday loan.
Retraining loans are government loans specifically geared towards offering funds for trade school or job training. These loans vary depending on the country, state, and even the municipality you’re located in, but a simple Pell Grant can provide over $5,000, especially if you’re already receiving unemployment benefits and wish to get back into the workplace.
- Process: Start the process on the Federal Student Aid website or by contacting your local legislature to ask about retraining loan options. Fill out the appropriate application, which will vary depending on whether you’re receiving unemployment benefits, and enter your personal contact information, bank account information, and information about the job/program you wish to pursue.
- Fund disbursement: The funds will be made available once your retraining begins.
- Interest rate: Varies, but typically much lower than other loans
- Credit requirement: Not required, but a good score will, again, boost the odds in your favor.
- Where to start: Start the process on the Federal Student Aid website.
Student loans are loans specifically geared towards students looking to pay tuition and/or living costs while in school. These normally range from $5,000 to $20,000 but can go much higher depending on the institution’s costs.
- Process: Most student loans are provided by the federal government or traditional lenders — local or community banks or credit unions, national banks, etc. To get a student loan through the government, you’ll have to prove your enrollment in a higher education institution and fill out a FAFSA form detailing the school’s tuition, your and/or your parent’s annual earnings, dependents, personal contact info. Through a private lender, you’ll need to have an account, and the institution will likely require a credit check (although, since many students have no credit, this isn’t necessarily a deciding factor) before approving the loans.
- Fund disbursement: Depending on whether the loan is for the institution or for the costs of living, the loan will either go directly to you (through your bank account) or pay the institution directly.
- Interest rate: Student loans have some of the lowest annual interest rates, often around 4%. Most federal loans offer a grace period, meaning the loans don’t need to be repaid until usually three to nine months after graduation. Private loans usually require you to begin repayment while still in school.
- Credit requirement: Not required for the FAFSA but a good credit score will boost the interest rate in your favor at private lenders. However, credit scores are not very influential for student loans.
- Where to start: Start with either the FAFSA or a local financial institution. Some private companies also finance student loans by comparing options through a network of banks and credit unions. Several options to consider include:
Title and collateral loans are personal loans that use a form of your property to secure the loan. The most common form of this loan uses your car as collateral (you hand over the title), but these loans are not specifically limited to cars, and collateral can even include real estate and collected life insurance. The amount of the loan directly corresponds to the value of the property you’re using as collateral; typically, you’ll receive about one-fourth the sum of the value of your car/property. If you fail to make your payments, the collateral then belongs to the lender, so be careful before taking the plunge with title/collateral loans.
- Process: For the title loan process, specifically, you provide the lender with your basic information, information about the make and model of your car, and you give the assurance that you can pay back the loan. This does not necessarily require employment, but it does require evidence of some form of income, whether in the present or the future. Then, once the loan is finalized, you’ll give the lender the title to your car and a copy of the keys, but you’ll be able to keep your car. Once you’ve paid back the loan in full, the lender will return the title and extra set of keys to you. If you fail to pay back the loan, the lender is free to seize and sell the car to pay back the loans.
- Fund disbursement: Normally, the loaner will give you cash in exchange for the title.
- Interest rate: Title and collateral loans tend to have higher interest rates due to the companies giving loans to those without jobs or with poor credit scores. Though not as high as payday loans, a typical APR would be around 300% for a title or collateral loan.
- Credit requirement: Most title loans do not even require a credit check. However, if a credit check is required, poor credit scores would not necessarily influence the decision.
- Where to start: For the list of providers, see our article about collateral and hard money loans.
Loan Options if You Don’t Have a Job or Bank Account
Pawnbroker loans are granted by local pawn shops and provide cash for valuable items that you bring in for evaluation — this can include everything from jewelry to power tools. The loans will be smaller in amount and most likely a fraction of the total worth of the item you’ve brought in for evaluation, but you can still receive a significant amount.
- Process: Bring in the item of your choice to your local pawnshop, and the staff there will appraise its value for you and make a loan offer. If you accept the offer, the pawn shop will give you a time frame to repay the loan, give you the loan in cash, and store the item until the loan is repaid or the loan’s due date passes (typically 30 to 120 days after the initial transaction). They’ll also give you a pawn ticket with the terms and fees and the item’s description on it — be sure to hold into this pawn ticket. If the due date passes without repayment, the item will become the property of the pawn shop to resell.
- Fund disbursement: The pawnbroker will give you cash in exchange for your item when you agree to the terms.
- Interest rate: As pawnbroker loans are through local and community shops, the interest rate will differ significantly based on each shop’s preferences and the state’s regulations where they are located. In general, finance charges vary from 5% to 35% per month.
- Credit requirement: Not required
- Where to start: Start with your local pawn shop — these shops are highly regulated and a common source of loans for many people.
If you are unemployed but you still need access to a loan, there are several lending options available to you, but you may need to do a bit of work and comparing to find the best rates. If you’re looking to start a new business venture or job, go back to school, or you just need to make ends meet until the next payday, you can likely find a loan. You can get unsecured personal loans, micro-loans, or short-term payday loans for virtually any purpose, and you cant put up collateral to get a secured title loan. You can also get student loans or restraining loans for educational or work purposes. If you don’t have a job or a bank account, you can take a valuable item to a pawn shop to get a short-term pawnbroker loan. Some of these loan options may not even require a credit check. Whatever your financial or employment situation, you can likely find a loan option to fit your needs.