The unemployment rate in the US is dropping at a steady pace. Nonetheless, more Americans are struggling financially. Those who have good jobs and a decent credit score may qualify for a personal loan from traditional financial institutions. But what do you do if you are one of the millions of unemployed people? If that sounds relatable and you need cash now, there are immediate options. You have the chance to qualify for certain loans, even with bad credit.
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Loan Options for the Unemployed
If nothing works, you still have a couple of workarounds:
- Secured personal loans. Collateral guarantees your lender that they can get their money back even if you stop paying your monthly installments. When considering these types of loans, note that failing to pay off your debt will result in you losing the collateral.
- Home equity loans. If you own real estate, this loan type helps you borrow money based on the value of your house.
- Payday Loans. These short-term advances help you get emergency cash with low requirements. Most people qualify without encountering any issues. These loans are fast and could help you until you get your next paycheck.
- Installment loans. Online lenders also offer loan products for a term spanning over several months. Besides the loan term, the available amount may go up to $5,000.
- Cash advances. Credit card holders can get a small cash advance. You need to be aware that these loans come at high interest.
- Lines of credit. Borrowers that qualify for a personal line of credit can access loans through their credit cards. If you manage to get such a loan, your payment will typically fluctuate from one month to another.
- Pawn Shop loans. Another alternative to traditional loans, borrowing from a pawn shop is fast. It does involve using a valuable object as collateral. The risk here is losing the asset you use as a guarantee. Your credit score is not relevant in this context.
Where Unemployed People Can Apply for a Loan
You can apply for a loan with a bank, credit union, or a direct lender. The first two options are more traditional, while payday businesses belong to alternative loans. See below a couple of typical examples.
Loan products: home loans, student loans, business loans, infrastructure loans, grants;
Amounts: vary depending on the borrower’s information;
APR: from 1.59%;
Perks: repayment terms of up to 180 months, wide range of products and services, financial education resources.
Loan products: payday loans for bad credit, holiday loans, installment loans, emergency cash loans.
Amounts: from $100 to $5,000;
APR: from 200%;
Perks: completely online application form, financial education resources, no hard credit checks, fill out just one application and get offers from many trusted lenders, 24/7 support.
Loan products: auto loans, personal loans, mortgage loans, student loans, home equity loans;
Amounts: from $500 to $20,000 and more;
APR: from 3,48%;
Perks: loyalty schemes, digital banking, financial guidance, no prepayment penalties
Loan products: consumer loans, student loan refinance, private student loans;
Amounts: from $5,000;
APR: from 2.45%;
Perks: personalized services, full support, secure customer reports, mobile operations.
Loan products: home equity, credit card loans, auto loans, student loans, personal loans, debt consolidation;
Amounts: from $1,000 or less;
APR: from 3.24%;
Perks: online banking, federally-insured, secure connection, 24/7 support.
The Three Factors Influencing Your Qualification
When applying for a payday loan, there are three main elements that directly influence your chances for approval:
- Your income. A direct lender will carefully consider your income source and look into your debt-to-income ratio. They will estimate whether you can repay them based on your monthly resources. If you don’t have a traditional job, alternative income sources may work with some lenders. They include unemployment benefits, child support or alimony, investments, your spouse’s income.
- Your credit history. A bad credit score will not usually stop direct lenders from accepting your application. Moreover, a lot of financial lenders advertise no credit checks at all. Nonetheless, having a good credit history is to your advantage. First of all, it indicates that you are a responsible borrower. Secondly, a fair score may help you get lower interest rates.
- Your legal residence. The terms and conditions for emergency loans vary by state. For instance, states like Mississippi, Nebraska, and Missouri cap the loan amount at $500. Other states cap the APR or modify the typical 30-day term for a cash advance. Consequently, the offer you receive from lenders also depends on state regulations.
Even if you are unemployed, you may still qualify for a loan. There are multiple options for you to access an emergency loan. Some lenders, such as payday loan providers and pawn shop clerks will not pay much attention to your credit score. However, before rushing into debt, do a quick research and compare your options. Take into account your income and state of residence to estimate your chances. And most importantly, pay off your loans on time.