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Few things are more stressful than being unemployed. You may be saying "I have no income and need money now" while wondering whether you're even eligible for a personal loan to get you through. Here, we'll show you how it's possible to get a personal loan while unemployed, and help you decide if it's the right move for you.
Your ability to get a personal loan doesn't depend on your employment status, although it might seem that way at first. Here's how to get a loan while you're out of work.
The income you use to repay the loan debt does not have to come from an employer. The best personal loan lenders understand that everyone's situation is different.
A lender will consider any of these as income:
If you don't have a steady income and need a loan asap, ask your lender if you can use something of value as collateral. When you get a loan with collateral, the loan is known as a secured loan, and lenders can take this collateral if you're unable to pay. Examples of collateral include:
Personal loans that don't require collateral are known as unsecured loans. With unsecured loans, the lender can't take your house, car, or other possessions if you miss payments. But unsecured loans are harder to get approved for. If you're struggling to get approved for a loan, find out if your preferred lender offers secured loans.
Generally, you'll need a score of 580 or higher to qualify for a personal loan (Although the credit score needed for a personal loan varies by lender and it may be possibly to qualify with a lower score).
If you need an emergency loan and don't have time to improve your credit score, you're not alone. Look for loans for bad credit. These lenders -- also known as a mashonisa -- will have experience working with low-credit borrowers and will be more likely to approve you for a loan.
A personal loan can be used for anything -- if you have debt piling up, you're probably focused on things like:
If you can't afford to make the monthly payment on a loan, look for a less stressful way to cover expenses. You are likely more stressed right now than you have ever been in your life, and if adding one more bill to your life adds more strain, take care of yourself by not taking on the obligation.
Below, we'll cover some alternatives that might be less stressful than a personal loan.
Since the pandemic, people have been able to find more financial assistance from:
If you're struggling to keep up with your bills, call your creditors and explain your situation. They may offer paused payments, deferment, forbearance, new repayment plans, or other forms of financial relief.
If you had a low-interest credit card before your job loss, check the current interest rate to make sure nothing has changed. If you're sure you can manage the monthly payment, consider using it as an emergency loan.
If you're in a bind, call your investment or retirement account manager to learn if you can borrow from your account. When you borrow from an investment or retirement account, you don't need to worry about credit score requirements or interest rates. You will give up the interest you could have earned from keeping your money in your retirement account, but that's a small price to pay for peace of mind and having your bills taken care of.
There's not a person in our country who has not been impacted in some way by the pandemic. If you have family and friends on solid financial footing, consider asking for a loan to get you through.
You are naturally concerned about your life, family, and finances. If a personal loan can help you through this time without adding additional stress, consider it as a loan option.
Looking for a personal loan but don’t know where to start? Our favorites offer quick approval and rock-bottom interest rates. Check out our list to find the best loan for you.
For most loans, you'll need to be able to show other sources of income, such as unemployment benefits or child support. If you don't currently have a source of income, you can try putting up collateral (like a car or savings account) instead.
Yes, if you need it and if the payments won't add extra stress to your life. If you don't know whether you'll be able to make the payments, take care of yourself by considering less stressful options (like borrowing from a retirement account) instead.
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We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent, a Motley Fool service, does not cover all offers on the market. The Ascent has a dedicated team of editors and analysts focused on personal finance, and they follow the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent, a Motley Fool service, does not cover all offers on the market. The Ascent has a dedicated team of editors and analysts focused on personal finance, and they follow the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands.