If you’re unemployed and need a loan, compare your loan options here

If you're worried you won't meet the employment requirements to borrow, find out about unemployed loans.

Compare guarantor loans for unemployed people

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Can I get a loan if I’m unemployed?

Potentially, yes. Some lenders will consider you for a loan when you’re not currently employed, but you’ll need to be able to show that the loan you’re applying for would be affordable. You may be earning some form of income or have suitable income-earning assets to repay the loan. This could mean receiving welfare payments, being self-employed or receiving a regular deposit into your account from investments.

Many lenders will require access to your banking history or financial documents in order to verify that you’ll be able to repay your loan. Lenders may be more willing to consider your application if you can apply with a guarantor – that’s a friend or relative (typically with good credit) who promises to step in if you miss a repayment.

What are the eligibility requirements for a loan?

The requirements differ depending on the lender and how much you’re looking to borrow. You’ll need to check the specific criteria before submitting an application, but any of the following might apply:

  • Age. You’ll need to be over 18, and for some lenders older. Lenders also often have an upper age limit, typically 70 or 75.
  • Residency. You’ll generally need to be a UK resident, with a UK bank account.
  • Minimum income. While you may not need to be employed, you still may need to have a regular income to apply. This is a common criteria for personal loans, so if you’re receiving welfare payments or have investment income, be sure to list that.
  • Credit history. Lenders are often able to look beyond a few negative marks on your credit report, but this flexibility has limits. For instance, you may be able to have a few late payments on your credit report, but a poor credit score could decrease your chance of being approved. Some lenders may specify that you must not have been bankrupt or in an IVA or have had CCJs with a specified timeframe.
  • Guarantor. Some lenders may require a guarantor, and will have eligibility criteria that the guarantor will need to meet.

Example: Sarah needs a loan

Sarah has been out of work for 3 months after completing her degree and currently receives benefits. She can get a job as a sales rep, but the trouble is she'll need a car to make it to work every day.

She has found a cheap car to purchase from a friend for £1,500. All she needs is a quick cash loan, which she'll be able to comfortably repay using her benefits, and when she gets paid from her new job, the loan repayments will be even easier to manage.

Sarah compares her loan options and sees that there are lenders who will consider her application if she applies with a guarantor. After comparing what's available and double checking the eligibility criteria, she submits an online application and is approved for the loan amount of £1,500.

* This is a fictional, but realistic, example.

How to increase your chance of approval

If you’re unemployed and in need of a loan, you might consider applying with another person such as your partner, a relative or friend, in order to boost your eligibility. Many lenders offer the option for joint applications, and some lenders even encourage you to apply with a guarantor in order for you to be eligible for a larger loan amount.

If you don’t meet the eligibility criteria, find out if you can apply with someone who does. However, this is a large responsibility the guarantor or cosigner is taking on because they’re sharing the responsibility for you repaying the loan.

Payday loans for unemployed people

If you’re unable to get a personal loan because you have no job, you may still be eligible for a short-term or payday loan. These are generally small loans that are approved quickly, and are available to those who are unemployed or have no income.

However, while you may be tempted to apply for a short-term loan, it’s important to understand that they are the most expensive type of finance, and should only be considered as a last resort, or in an emergency. Taking out a payday loan when you’re unemployed can quickly lead to financial difficulty if you can’t manage to make your repayments.

What are my other unemployed loan options?

  • Unemployed cash loans. A form of short-term loan, a cash loan is a small, instant loan offered by short-term online or outlet lenders. You’ll generally only be able to borrow a small amount, and expected to pay it back within a couple of weeks or months.
  • Secured loan. If you’re unemployed but own equity in your house or another valuable asset, you may be able to improve your loan chances by applying for a secured loan. The asset you own is used as collateral against the cost of the loan, which can help decrease the risk to the lender, making approval more likely.

Can I get a loan if I’m unemployed with bad credit?

Unfortunately, your chance of being approved for a personal loan if you have no job and poor credit is very small. When considering whether to give you a loan, lenders evaluate how likely you are to repay the loan, and having no income and a history of struggling with debt will mean you represent too much risk for most lenders.

Most lenders will perform some form of search on your credit when you apply for a personal loan, so you’re also unlikely to find a personal loan with no credit check, especially if you’re unemployed.

Bottom line

You haven’t reached the end of the financing road just because you’re unemployed. If you’re able to manage your repayments with another form of income, there are lenders who will consider you.

Remember to compare all available options to get the best loan for your needs.

Will you be approved?

Check your personalised rates and likelihood of acceptance.

Frequently asked questions

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