If you are unemployed, getting a personal loan is crucial but challenging. Without any income proof, many lenders hesitate to lend you money. Plus, things get worse with a bad credit score.
Hence arises a question, “How to get a personal loan with bad credit and no job?” This low qualification limits you to a few options like getting a loan from online lenders, friends & family, pawnshops, getting title loans, etc.
Best financial experts discuss all these approaches in detail.
Why Is Credit Score and Employment Critical for a Personal Loan
Here, we detail the importance of employment status and credit score to secure a personal loan. We highly recommend you understand the concepts to navigate the processes of getting a personal loan with no employment and bad credit.
Importance of Credit Score
- Lenders use your credit score to decide on your ability to repay the loan. Higher scores mean more trust and lower scores indicate less trust.
- If you have a high credit score, lenders offer you a loan with a lower interest rate.
- A good credit score makes the loan approval process easy.
- With a high credit score, you are able to secure a bigger amount of loans.
- A good credit score allows you to get a longer payoff period.
Importance of Employment
- If you take a personal loan, you must pay it back on a monthly basis. In this case, your income greatly matters to gain a lender’s trust.
- Lenders want to make sure you can pay them on time. If you have a job, it makes you seem less risky to them.
- If you’ve been working at the same place, it generally is a positive sign for the lenders. They feel more confident you will keep earning money to repay them.
Urgent Review: How to Get a Personal Loan with Bad Credit and No Job
This section explains the most effective ways to get a personal loan with bad credit while unemployed.
Take Loan from Online Lenders
Many online lenders offer you personal loans even if you are unemployed and have a low credit score. In this case, you must show proper documentation that you are receiving unemployment benefits from the government.
You can expect to get a maximum of $5,000 for a loan term of up to 60 months. We must inform you that the interest rate can be high due to your low credit score. The interest rate can touch the 35.99%.
Taking Loan from Friends and Family
If you are unemployed and have a low credit score, getting a personal loan from any conventional lender is tough. And the lenders who will lend you the amount will usually charge a greater interest rate. To deal with both of the obstacles, you can get financial help from any friend or family member. However, avoid asking for money from one and all close relatives.
It is better you make a list of the rich and capable ones. Visit them one by one and explain your situation. We also recommend you offer them a standard interest rate. It will act as a convincing factor. However, ensure you pay back on time.
Consider Loans from Local Pawnshops
If you have valuables like a firearm, jewelry, expensive artwork, etc., you can dispose of them at a pawnshop and get a personal loan. List the local pawnshops and visit all to get the best deal.
A pawnshop will generally offer you 20%-50% of the respective item’s resale value. Also, the interest rate will be as high as 35%-50%, depending on the location.
Choose a Title Loan
It is highly possible if you have any valuable property like land, home, car, etc. But, we strongly recommend you use only your car in this case, as failing to pay it back means losing possession of the asset. Considering this, using the car is less risky.
However, title loan providers usually offer 50% of the asset’s value as a loan. Here, the interest rate can go up to 300%-400%, and the term length is just one month.
Loan against Payday Check
If you have recently lost your job and still owe some payments from the employer, you can go for this option. Some lenders provide you with a loan based on your payday check.
In this case, you pay the borrowed amount with interest on the next payment day. We suggest you do not expect a larger amount and be ready to pay a higher interest rate. The amount and interest will depend on your negotiation skills.
So, how to get a personal loan with bad credit and no job? We expect our proven borrowing methods will help you secure a personal loan. These time-tested approaches are result-oriented. However, we warn you not to fall into any trap of an abusive lender.
As you are unemployed, you are in desperate need of money. This situation can be a beneficial factor for some unethical lenders. Also, try to get financial support from government programs.