Finder makes money from featured partners, but editorial opinions are our own. Advertiser disclosure

Getting a personal loan before quitting your job

You know you need to save up. But getting a personal loan can also help you earn big down the road.

Leaving your job can be a great way to take your career (and salary) to the next level. But figuring out how to pay for your next move isn’t always easy. You might be worried about not having enough savings to quit, but that shouldn’t trap you in a job you’re determined to leave. Cutting down on your spending or even taking out a personal loan could help you grow during unemployment or a career transition.

How much should I save before I quit my job?

Ideally, you should have enough savings to cover at least six months of living expenses before leaving a job. How much is that? You can calculate this by first making a budget for yourself based on the past few months of spending. Don’t include any unusual expenses like that trip to Thailand you took two months ago. Also deduct any work-related expenses like deposits into your 401(k) and transportation costs.

Once you have an idea of what you need to live a reasonably comfortable life, multiply that by six. If you have this amount saved up before you quit, you should be OK until your next gig.

Financial checklist before quitting a job

  • Build an emergency fund. Because you don’t have the safety net of a job, make sure you have an emergency fund should you get into an accident or need money in a hurry.
  • Take care of your retirement account. Different employers have different policies when it comes to retirement savings. Some allow you to roll over your funds into another retirement account, making you responsible for deposits each pay period. You might also be allowed to leave it where it is, though you might have to pay some administrative fees. Ask your HR department what your options are.
  • Pay your bills ahead of time. That way you don’t have to worry about leaving room in your budget for utilities and essentials for a few months.
  • Take advantage of your health insurance. Chances are your employer health benefits are better than your coverage once you’re unemployed. Get a checkup, see your dermatologist about that weird mole and get refills on prescriptions before that stuff starts to cost an arm and a leg.
  • Cash in on your vacation time. Unless you’re starting a new business and need vacation days to get it off the ground, consider holding off on taking vacation days if your state allows you to take cash instead. Use that money to help finance your next adventure — you’ll have lots of free time soon anyway.
  • Take out that mortgage. New jobs look bad on mortgage applications and being unemployed is even worse. As long as you’re sure you can comfortably manage making monthly mortgage payments, you might want to do it now while your employment history looks stable.

What if I don’t have enough saved?

You may be able to make leaving your job still work out financially. Let’s be real: Saving up for six months of living expenses can take a long time, especially if you’re underpaid. But even if you only have enough cash to cover a couple months, you have other options.

Cut down on spending

Instead of getting rid of only the unnecessary expenses like that gym membership you never use or popcorn of the month subscriptions, go through your recent bank statements and be brutal about where you can cut back on spending. Maybe you spend a lot at restaurants and bars, or maybe you buy too many socks. Cut back in any area that isn’t absolutely essential. Even something as simple as avoiding ATM fees by only withdrawing cash at your bank can help.

Want to get extreme? Consider moving back in with your folks if they live nearby. Rent alone in an expensive city like New York or San Francisco can account for half of your monthly expenses. Just be prepared to start feeling like a moody teenager again (trust us).

Get a personal loan

Taking out a personal loan along with cutting spending can help you afford job training and classes or experiences that can build your career.

To save money, go for a loan with a longer term and no prepayment penalties. That way, you can afford the low monthly payments while you’re unemployed and avoid interest by paying off your loan early once you get a job.

How do I get a personal loan before leaving my company?

Applying for a personal loan ahead of ending employment is crucial. Almost every lender lists employment as a basic income requirement — though not all do. To get a decent rate, you’ll typically need to make a certain amount of money each year. Apply for your loan well in advance of your two weeks notice to get the best rates. Get the funds in your account before your last day for peace of mind.

Take care of other aspects of your finances before you apply. Lenders consider your credit score, credit report, debt-to-income ratio (DTI) and employment status when deciding on your rates, fees and loan amount. Check your credit report and correct any errors by contacting the offending creditor and your credit bureau. Make an effort to pay off your debts to lower your DTI. Hold off on canceling any credit cards and avoid other moves that could accidentally hurt your credit score.

Compare personal loans from top lenders

1 – 6 of 6
Name Product Filter Values APR Min. credit score Loan amount
Best Egg personal loans
Finder Score: 3.8 / 5: ★★★★★
Best Egg personal loans
8.99% to 35.99%
$2,000 to $50,000
Fast and easy personal loan application process. See options first without affecting your credit score.
Upstart personal loans
Finder Score: 4.2 / 5: ★★★★★
Upstart personal loans
7.80% to 35.99%
$1,000 to $50,000
This service looks beyond your credit score to get you a competitive-rate personal loan.
SoFi personal loans
Finder Score: 4.4 / 5: ★★★★★
SoFi personal loans
8.99% to 29.99% fixed APR
$5,000 to $100,000
A highly-rated lender with competitive rates, high loan amounts and no required fees.
Finder Score: 4 / 5: ★★★★★
8.49% to 35.99%
$1,000 to $50,000
Check your rates with this online lender without impacting your credit score.
LendingPoint personal loans
Finder Score: 3.3 / 5: ★★★★★
LendingPoint personal loans
7.99% to 35.99%
$2,000 to $36,500
Get a personal loan with reasonable rates even if you have a fair credit score in the 600s.
Happy Money
Finder Score: 3.8 / 5: ★★★★★
Happy Money
11.72% to 24.50%
$5,000 to $40,000
Pay down your debt with a fixed APR and predictable monthly payments.

What should I do with my loan funds?

What you do with your loan is largely up to you — provided you aren’t breaking any laws. But you might want to have an idea before you apply, as some lenders ask what you’re going to use your funds for in the application.

If you don’t have a concrete idea on what you’ll use the money for, here are four solid ways to use a personal loan after you leave your job.

1. Take some classes or get certified

Taking time off from work to take courses in your field could give you a competitive edge for your next job or help you switch careers. A class that offers a certification usually shoots you into a higher pay bracket. This is particularly useful in a field that’s constantly evolving, like computer programming.

If this is something you’re interested in, apply with a lender that allows you to use your loan toward non-degree educational purposes. You might want to contact your program’s financial aid office to see how they suggest financing your courses.

2. Volunteer

Volunteering is another way to gain work experience in a new field and could even lead to a new job. It’s an opportunity to learn new skills in a risk-free environment and can give you a fresh perspective on your career by breaking the habits of your old job. Plus, you might be able to travel abroad at a relatively low cost.

Check postings on or foundations like the Bill and Melinda Gates Foundation or the Ford Foundation. If you volunteer for a US service like the Peace Corps or Americorps, you can defer repayments for some federal student loans and move a year or two closer toward having your loan forgiven.

3. Travel

Traveling is not the same as vacationing. It requires work, can be uncomfortable and can end up being more expensive than you originally planned. But it can give you a fresh perspective on life and your career, teach you new skills — like a new language — and make you a more appealing candidate when you apply for jobs.

Travel hack: Apply for jobs in an area you’d like to explore. You can visit other countries on weekends and holidays without having to make huge financial sacrifices. Plus, you might not have to pay income taxes, depending on which state you live in.

4. Start your own business

Maybe you quit your job because of a passion or desire to be your own boss. It’s generally not a great idea to start your business with a personal loan. Most new businesses fail. However, there are a couple of things you can do to get it off the ground even before you leave your job.

Got some extra vacation days? In most states, you’re eligible to either cash those in or use them to get a head start on your new entrepreneurial endeavour. Use that time to set up a crowdfunding campaign, and seek out investors to cover startup costs. A personal loan can help you cover your personal expenses while your business is getting off the ground.

Bottom line

Leaving the stability of a job can be scary, but also an exciting career move. Having a nice sum of money saved to cover living expenses makes quitting more comfortable. Taking out a personal loan to fund training, travel or help tide you over while you launch a new business could help you earn more money in the future — but try to save up to avoid borrowing first.

Should I repay my 401(k) loan before leaving my job?

Yes. A 401(k) is connected to your job. If you leave before paying it off, you could end up having to pay up to 40% of your loan amount in penalties and taxes. If you can’t afford to pay it off just yet, consider staying with your employer a little longer.

Frequently asked questions

Anna Serio's headshot
Written by


Anna Serio was a lead editor at Finder, specializing in consumer and business financing. A trusted lending expert and former certified commercial loan officer, Anna's written and edited more than 1,000 articles on Finder to help Americans strengthen their financial literacy. Her expertise and analysis on personal, student, business and car loans has been featured in publications like Business Insider, CNBC and Nasdaq, and has appeared on NBC and KADN. Anna holds an MA in Middle Eastern studies from the American University of Beirut and a BA in Creative Writing from Macaulay Honors College at Hunter College, CUNY. See full bio

Anna's expertise
Anna has written 251 Finder guides across topics including:
  • Personal, business, student and car loans
  • Building credit
  • Paying off debt

More guides on Finder

Ask a Question provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Go to site