Can You Get a Personal Loan Even When You’re Unemployed?

Sponsored Content

Being unemployed can be very tough. It is one of those times when you want to borrow money the most to make ends meet. However, lenders might hesitate to let you borrow money because you lack any traditional income source that lenders usually evaluate before your loan application approval.

Factors that Determine the Result of Your Loan Application

Lenders look at several factors in assessing your loan application. They need to make sure that you can repay them in the future without any problems. Below are some of those factors:


Lenders look at income the most in evaluating loan applications. That is why getting a loan while being unemployed can be challenging. However, having other sources of income besides a traditional job can help you qualify for a loan. Here are some examples of other sources of income:

  • Investments: Money gained from your investments can help you qualify for a loan. However, one-time capital gains might be tough to consider. On the bright side, recurring income from rental properties, for example, maybe accepted by some lenders.
  • Retirement Benefits: Your retirement benefits may help you get a loan if you are already retired as an alternative from income gained by a traditional job.
  • Spouse’s Income: You can add your spouse’s income in your loan application to persuade lenders that you are responsible enough to repay the amount you want to borrow entirely. However, to do this, you may need to include your spouse as a co-applicant for the loan.
  • Other sources: Child support, veteran affairs benefits, public assistance, etc.

Debt to Income Ratio

Lenders use the debt to income ratio in calculating the possibility of you being able to fully pay the loan in the future. This is done by dividing your monthly debts payments by your monthly gross income. Moreover, lenders usually look for a ratio under 36% to approve loan applications.

Credit Files

Your credit status is also crucial for lenders in evaluating your loan application. They will look at your credit score, credit report, and credit history. Although having good credit cannot make up for your unemployment status, it can positively impact your loan application.

Risks Involved in Borrowing Without a Job

It is vital to know the risks of borrowing while being unemployed before you finally decide to do it. Below are some of the possible risks you might encounter:

  • Failed Payments: This is one of the most significant possible risks that you might encounter in getting a loan without a job. It can be very challenging to repay what you owe to lenders. Moreover, failure to make repayments can significantly damage your credit and make your current situation even worse.
  • High-Interest Rates: The higher the interest rate, the higher the overall loan costs. If you have a low income, lenders tend to offer higher interest rates than usual. That is why you have to make sure that getting a personal loan with your current unemployment status is your best option.
  • Short Repayment Terms: Lenders tend to give shorter repayment terms to borrowers who are riskier than usual. This is because they believe you might not repay them in a long term repayment schedule. They think they should give you a shorter repayment term to urge you to repay the loan faster.

Loan Options for the Unemployed

If you think getting a personal loan can be tough for you, here are other alternatives available:

  • Cash Advances: Credit cards usually offer cash advances. However, it is essential to know that interest rates are usually high, and it can be higher depending on your credit status.
  • Home Equity Line of Credit (HELOC): HELOC is a type of loan that’s like having a credit card with a revolving balance. Moreover, your home will serve as collateral to this line of credit. Therefore, you have to face the risk of losing your home if you fail to make proper repayments.
  • Line of Credit: This is similar to a credit card. You can borrow money until you reach the limit, usually set by the lender, and repay it. Once you can fully repay the money you took out from your account, you can borrow again in the case of an open line of credit.
  • Secured loan: You can set up your valuable assets as collateral in applying for a secured loan. Collateral will serve as security for lenders in case you fail to repay your loan. Therefore, the risk of losing the asset you put up is present in this type of loan.


Getting approved for a loan without a job can be challenging. However, it is possible when you have other sources of income and assets available that can make up for your current unemployment status. That is why it is vital to think hard about getting a loan first before facing the risks involved.

Editor’s note: This is a paid article.