Worried you won’t meet the employment requirements to borrow? Find out about unemployed loans.
If you’re not employed in the traditional sense and are in need of finance, you may be wondering whether any lender will consider you for a loan. This guide will take you through your options for borrowing while you’re unemployed, what you need to be aware of, and how you can apply. You can also see the ins and outs of eligibility criteria for lenders that offer these kinds of loans.
Can you get a loan if you’re unemployed?
The short answer is yes, but you will need to be earning some form of income or have suitable income-earning assets to repay the loan. This may involve you being self-employed, or you receiving a regular deposit into your account from shares or something similar. And only some lenders will consider you for a loan.
Often, lenders will require access to your banking history and financial documents in order to verify that you will be able to repay your loan.
Important things you’ll need to consider before borrowing
- You need to be able to repay the loan.
The main thing lenders will consider when you apply is whether you have the means to manage your repayments. If you are only looking to borrow a small amount and your income and expenses show you can easily manage the ongoing repayments, then you may be eligible. If you are looking at borrowing a large amount of money that will make it hard for you to manage day-to-day, then the lender cannot approve you.
- Other requirements will need to be met.
You may find it hard to be approved if you have any other short-term loan contracts open that you’re currently repaying, and many lenders will not consider you for a loan if you’re currently bankrupt. You’ll need to check the other eligibility requirements set by the lender before you apply. Just because they have flexible criteria when it comes to your employment does not mean they will be flexible about everything.
What eligibility requirements will I need to meet for an unemployed loan?
The requirements differ depends on which lender you’re looking at applying with and how much you’re looking to borrow. You’ll need to check the specific criteria before you submit an application, but any of the following might apply:
- Earning a specific income. While you may not need to be employed, you still may need to earn a regular income to apply. This is a common criterion you’ll find with personal loans, so if you aren’t employed or are employed casually but earn a sufficient income, you still may be eligible to apply.
- Your credit rating. With flexible employment criteria often comes flexible credit criteria. That is, if a lender is willing to look beyond your not being in a job, they are often able to look beyond negative marks on your credit file. Keep in mind, though, that this flexibility has limits. For instance, you may be able to have a default or two and still be accepted, but many lenders will not consider you if you are currently bankrupt.
- Your assets. If you own a car or a boat outright or have some equity in a property, your application may have a greater chance of being approved. This is because the lender may use this as security for the loan.
Are there any alternative loan options?
There’s more than just short-term lenders to consider if you’re in need of finance while you’re unemployed. It’s important to consider all of your options and find the best one for your needs and situation.
- Microfinance providers. If you lack collateral, steady employment, and a verifiable credit history, but possess expertise in certain fields (eg. agriculture, manufacturing, retail, wholesale etc), microcredit loans are designed to help you start a small business.
- Joint applications, guarantors and co-signors. If you’re unemployed and in need of a loan, you can consider applying with another person – a partner, relative or friend – in order to boost your eligibility. Many lenders offer the option for joint applications, so if you don’t meet the eligibility criteria, find out if you can apply with someone who does. Remember that this is a large responsibility the guarantor or co-signer is taking on as they are sharing the responsibility for you repaying the loan.
So, you don’t reach the end of the financing road when you are unemployed. If you are able to manage your repayments there are lenders who will consider you and loan options available to you. Remember to compare all options that are open to you to secure the best one for your needs.