Personal loans can be a lifesaver when you need quick funds for an unexpected expense, be it a medical bill, a car repair, or a home improvement project. It is an unsecured type of loan that does not require you to pledge any asset as collateral. To qualify for a personal loan, you must meet the lender’s basic eligibility criteria. These criteria generally include factors such as your income, employment history, credit score, stability of your business, and other financial obligations.
But there could be a time when you are taking a break between jobs or waiting to start your own business. In such cases, you have no stable income. So, is it still possible to get a personal loan when you are unemployed? Well, some lenders may offer you personal loans even if you don’t have a steady income. However, the interest rates and other factors may differ from personal loans provided to employed individuals. Read on to know your options to get a personal loan if you are unemployed.
Loan with a co-borrower
A good CIBIL score for personal loans is extremely important. You can apply for a personal loan with a co-applicant with a good credit score and steady income. This may increase the chances of your application being approved. A co-borrower is liable for repayment if you default on your Equated Monthly Instalments (EMIs). Having someone to share the compensation responsibility with you makes the lender feel more confident in your ability to repay the debt.
Pledge collateral as security
Before applying for a personal loan, try to pledge collateral as security to assure lenders about the loan repayment. Collateral is an asset such as gold, a car, or real estate that you can sell as security to repay the loan. However, it’s important to check with the lender first to see if they offer asset-backed personal loans and to understand what types of assets they accept. Also, remember that if you default on your loan payments, the lender can seize your help and auction it to recoup its losses.
Important points to remember:
Sanctioning an instant personal loan to a person with no job is risky for the lender. So, to compensate for the risk, a lender generally does two things:
Higher personal loan interest rates –
Lenders may charge higher interest rates when loaning money to a high-risk borrower to hedge the risk factor. This is because lenders need to protect themselves if the borrower cannot repay them.
Credit history –
The lender checks your financial history, such as credit card history, loan repayment and settlement, and more.
To sum up
If you don’t have a job but still need a personal loan, opt for any of the abovementioned options. And whatever route you decide, check the interest rate, fees, and terms and conditions to choose the right lender.